While off to a rocky start, the health marketplace is open under the Affordable Care Act. With all the controversy surrounding this legislation, navigating through the rhetoric can be difficult. Here is a basic outline of how Obamacare will affect business owners.
- Full-time employees defined: Many of the Obamacare requirements revolve around the number of full-time workers a business employs. It’s important to note this does not mean simply counting those who work at least 40 hours per week. In fact, “full-time equivalent” refers to those working a minimum of 30 hours per week. Secondly, planning to reduce hours so that fewer employees qualify as “full-time” is not a good strategy either. For example, if a business has 20 part-time employees working 24 hours per week, they would be counted as 16 full-time equivalents.
- “Shared Responsibility” Payment: Beginning in 2015, businesses with a least 50 full-time employees will be required to make a “shared responsibility” payment if the company does not offer employees and dependents a health plan. Note, even if a business offers health insurance they could still be liable for the shared responsibility payment if the insurance doesn’t mean “minimum essential coverage” or if any full-time employees meet the federal subsidy requirements.
- Tax Credits: Businesses can qualify for tax credits that help to offset the cost of employee insurance premiums. Through 2015, a business with less than 25 full-time employees earning an average of $50,000 annually will qualify for a tax credit. However, beginning next year small businesses are required to participate in an insurance exchange in order to claim the credit. Although the credits are smaller, tax exempt small businesses do qualify as well.
The next few years will prove to be full of changes in the health care and tax arenas. As a business owner, it’s important to stay current with legislative changes. Contact us for help navigating your business through this transition.