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Affordable Care Act: Options for Small Businesses

When it comes to the Affordable Care Act, what are the options for your small business? Below is a quick summary of options based on your number of employees.

For more detailed information on key provisions of the Affordable Care Act for small businesses, see www.sba.gov/healthcare.

Business size:

Self-employed

 

Responsibilites:

  • Under the Individual Shared Responsibility Provision, all individuals--including those who are self-employed--must have minimum essential coverage (i.e. basic health insurance coverage) starting in 2014 or pay a fee known as the "shared responsibility payment" when filing a federal income tax return unless coverage is unaffordable or they qualify for an exemption.

Options

  1. If you already have health care coverage, you can keep it as long as it provides minimum essential coverage. Currently, job-based plans, government-administered plans such as Medicaid, and some other plans already provide minimum essential coverage.
  2. Purchase coverage through the Health Insurance Marketplace opening October 1, 2013.

Under 50 full-time equivalent employees

 

Responsibilities

  • Under the Affordable Care Act, employers covered by the Fair Labor Standards Act (generally, those that have at least one employee and at least $500,000 in annual business dollar volume), must notify their employees of coverage options available through the Marketplace. Employers are required to provide this notice to all current employees no later than October 1, 2013, and to each new employee at the time of hire beginning October 1, 2013, regardless of full-time status.

Options

  1. Offer no health care coverage. Employees will be responsible for obtaining their own minimum essential health care coverage.
  2. Offer no health care coverage but secure the services of an agent/broker to help employees navigate the Health Insurance Marketplace and select their coverage.
  3. Offer health insurance to employees through the Small Business Health Options Program (SHOP) Marketplace. For 2014, employers using SHOP will select a single plan for all employees. Insurance obtained through the SHOP Marketplace is eligible for small business health care tax credits.
  4. Offer employee coverage through an insurer outside of the SHOP Marketplace. Note that small business insurance obtained outside of the Marketplace is not eligible for small business health care tax credits.

50 or more full-time equivalent employees

 

Responsibilities

  • Under the Affordable Care Act, employers covered by the Fair Labor Standards Act (generally, those that have at least one employee and at least $500,000 in annual business dollar volume), must notify their employees of coverage options available through the Marketplace. Employers are required to provide this notice to all current employees no later than October 1, 2013, and to each new employee at the time of hire beginning October 1, 2013, regardless of full-time status.

Options

 

Starting January 2015...

  1. Offer affordable coverage that meets minimum value to full-time employees. Employers with 50 or more full-time equivalent employees are NOT eligible to purchase coverage through SHOP.
  2. Offer no insurance to full-time employees and pay an annual fee known as the Employer Shared Responsibility Payment. Currently, the payment amount is set to be $2,000 per year times the number of full-time employees minus 30; as with other health care reform provisions, this may be subject to change.
  3. Offer insurance to full-time employees that does not meet affordability or minimum value standards and pay an annual Employer Shared Responsibility Payment for every full-time employee who receives premium assistance (aka a premium tax credit) in the Health Insurance Marketplace.

Note: Starting in 2016, employers with between 50 and 99 employees will also be eligible to purchase coverage through SHOP.

 

IMPORTANT: The law does not actually require employers to offer health care coverage to employees.