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Living in Interesting Times; The Affordable Care Act for Small Businesses

Finance

A Chinese blessing (or is it a curse?!) says, in part, “May you live in interesting times.”  Apparently, we’re all blessed these days as the Affordable Care Act continues to take effect.

If you own a small business, chances are you still have questions about the Affordable Care Act.  While it is true that most businesses with fewer than 50 employees are exempt from the penalty and tax requirements of the ‘Act, be careful if you have multiple businesses as you may have to aggregate all your employees in the related businesses to determine the total number you employ and your responsibilities under the ‘Act.

If you are a small business, you do not have to provide coverage to employees and their dependents.  However, if you do choose to offer coverage, be aware that you may be able to purchase coverage on your state exchange starting October 1, 2013. Talk to your exchange and/or your insurance broker to determine whether the exchange coverage is competitive with your existing group plan.

Also, you may be eligible for a federal tax credit of up to 35% (this increases to 50% effective January 1, 2014) of health insurance premiums you pay for employees. This credit is available if you have fewer than 25 full-time employees and if you pay average wages of less than $50,000 annually.  The more than 10 employees and/or pay average wages of more than $25,000, the amount of your credit is reduced.  Be sure to discuss with your tax advisor if you’re not already taking this credit.

Finally, although you may not have to provide coverage, you need to be aware that all your employees will have to buy coverage starting January 1, 2014 or pay a tax.  The amount of the tax varies depending on the employee’s income and subsidies may be available to individuals earning between 100% and 400% of the federal poverty level who are not covered by an employer plan.  Again, you may want to discuss possibilities with your insurance broker or attend one of the many training seminars currently being presented around country.

Good luck and blessings, my friends, it’s going to be an interesting time!

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