The Patient Protection and Affordable Care Act (ACA) likely affects your small business in several ways. How it affects you depends on the number of full-time employees that work for you.
This article focuses on the basics of Obamacare for a small business owner, how to comply, and your healthcare options as an employer. See Obamacare Basics: Understanding the Affordable Care Act for a general overview of the ACA.
In general, you won't be penalized for not offering health insurance benefits to your employees if you have fewer than 50 employees who are full-time. But you'll need to provide your current and newly hired employees with a Notice of Marketplace Coverage Options and comply with the other provisions of the ACA.
Only large businesses, those with 50 or more full-time equivalent employees working 30+ hours per week on average are required to offer health insurance coverage or pay a penalty. These employers will automatically be subject to the Employer Shared Responsibility Mandate.
Under the employer mandate, large businesses must fulfill the following:
If you already offer health insurance, you won't have to change plans as long as your insurance conforms to the minimum standards governed by the ACA. Your employees may purchase a private plan instead, but you aren't required to make a contribution to their premiums if they choose to do so.
The small business section of HealthCare.gov provides additional information about small business compliance with the ACA.
The Affordable Care Act has created the Small Business Health Options Program (SHOP) for small business owners who want to provide health coverage to their employees. Accordingly, small businesses may benefit from some of the ACA's incentives, such as access to the health insurance marketplaces and certain exemptions.
Through the SHOP program, the ACA offers generous Small Business Health Care Tax Credits and other incentives to small businesses with fewer than 25 full-time workers. This tax credit is worth up to 50% of your contribution to FTEs' health insurance premiums.
To qualify for this, you must:
Go to the healthcare tax credit calculator if you want to learn more about tax credits or if you want a specific estimation of the small Business Health Care Tax Credit you qualify for.
All small business owners are required to provide their employees with a summary of benefits and coverage form, which explains the cost and coverage of their plan. This notice allows employees to compare the employer-sponsored plan with those offered in the private market. Penalties may be levied for noncompliance (although there is no individual mandate to purchase coverage).
Business compliance with laws and regulations can be quite complex, even for the smallest business. But failure to comply can be extremely costly. Don't guess your way through the process; contact an experienced business attorney near you for expert advice on small business compliance with the ACA.
