The 2010 Patient Protection and Affordable Care Act (ACA) has been in the news again recently. Many of the Act’s provisions were set to begin on January 1st, 2014, but last month the Obama Administration delayed the implementation of several specific provisions in response to several complaints from businesses.
When I meet with business owners and business leaders in our community, I’m often asked about the ACA, its rules, and its deadlines, so with this article, I’ll going to try to clarify what this law means for small businesses; how the different parts of the Act will affect different types of businesses; and when it all is going to happen.
The Act itself is a hefty 906 pages long, but the parts of the ACA that most directly affect businesses are: (1) the new state insurance exchanges; (2) tax credits; and (3) the politically-charged “employer mandate.”
New State Insurance Exchanges
Many companies already give their workers healthcare insurance coverage and want to continue to do so. One of the purposes of the ACA is to encourage businesses to continue this practice.
However, a new market — the Small Business Health Options Program (SHOP Exchange) — will be established to help businesses and individuals compare and buy insurance coverage. This is not new concept, though; Americans have been buying automobile insurance, airline tickets, and mobile phone plans this way for decades. Furthermore, participating in an exchange is not mandatory, and companies can continue to offer health plans outside of these exchanges. These exchanges are not part of the delay, and as originally scheduled, these new exchanges will begin on January 1, 2014.
Premium Subsidies and Tax Breaks Are Available to Certain Small Firms
Certain small businesses may be eligible for substantial tax benefits for providing workers with healthcare coverage. For example, companies with fewer than 26 employees that meet certain criteria can claim a partial tax credit for the premiums they pay if they buy worker health insurance through a state-based insurance exchange. Businesses with 10 or fewer employees may be able to take a full tax credits for their premiums.
These credits — designed to help employers offset their cost of providing employee healthcare coverage — will also take effect on January 1, 2014, as planned.
Penalties for Not Providing Coverage: The “Employer Mandate”
Under the ‘employer mandate” provision of the ACA, businesses with at least 50 full-time workers will be subject to penalties if they do not provide these employees with healthcare coverage. A business will have to pay $2,000 for every non-covered full-time employee. However, the first 30 employees will be excluded from the penalty assessment.
The ACA defines a full-time employee as an individual who works a minimum of 30 hours per week, or 120 hours per month. Henceforth, some part-time workers (individuals who worked 32 hours per week) will now be considered full-time employees. Businesses will have to offer these employees healthcare coverage (if they now total 50 full-time employees or more).
Because of concerns raised by larger employers about the complexities of putting this coverage into place, this is the provision the Administration has ordered to be delayed until January 2015. The provisions will remain the same, but these “over-50” companies that subject to this part of the ACA will have more time to get ready.
The Law Office of Brandon Woodward P.A. is eternally grateful that you have visited our web site or read our blog. The materials and information contained here are provided for informational purposes only and are not to be considered as legal advice. For questions about ACA and its affect on your business, or any other legal issues facing your business, please a message us at firstname.lastname@example.org and we’ll give you a totally FREE consultation.