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Many people, individuals and business owners alike, are unsure of what the Affordable Care Act will mean for them. With the January 2014 deadline merely months away, small businesses need to be prepared for the changes ahead. Let’s explore just exactly what those changes are.

Under the ACA, a small business is defined as one with fewer than 50 full-time employees. These small businesses will not be required to provide health insurance to their employees. A recent report has noted that 97 percent of small businesses (as traditionally defined in America) do have fewer than 50 employees, which means that only three percent of all small businesses will actually be affected by the ACA.

  • Small businesses that choose to offer employee healthcare will be able to take advantage of certain tax credits, granted they meet the following conditions:25 or fewer full-time employees
  • Pay at least half of the insurance premium costs for employees
  • Each employee has an average annual wage of less than $50,000

This means that small businesses with 26 to 49 employees will not be eligible for tax credits. However, the businesses that do meet these requirements can receive two consecutive years of tax credits on a sliding scale of up to 35 percent of premiums paid during 2014 and up to 50 percent of premiums paid during tax year 2015. These tax credits are designed to help cover the costs of providing health insurance for both small businesses and non-profits.

Larger businesses with 50 or more employees will be subject to fines that can exceed $40,000 if they do not offer employees adequate health insurance. However, small businesses are exempt from such fines.

Small businesses that do choose to offer employee healthcare will need to select a price tier of coverage and decide how much of the premium to cover (larger business must cover at least 50 percent of each employee’s “minimal essential coverage”). If spouses and families are not covered under an employee’s plan, dependents will need to obtain individual health insurance policies from the Health Insurance Marketplace.

Studies have reported that 85 percent of employees would continue to work for their employer even without subsidized health insurance; however, 60 percent of those workers would expect a pay raise to compensate for the lack of benefits. This information should be considered by any small business considering a change in employee benefits.

Still have questions about the changing landscape of healthcare? Call Alliance Insurance Group at 888-279-9701 for more information on Denver Group Health Insurance.

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Alliance Insurance Group
710 Golden Ridge Rd., Suite 120
Golden, CO 80401

Phone: 888.279.9701