AFFORDABLE CARE ACT
How the ACA Impacts Small Businesses:
Many provisions of the Affordable Care Act (ACA) became effective on January 1, 2015. Emphasis would like to provide you with a concise summary of the regulations and how they affect your business and your employees.
1. The ACA mandates that individuals buy health care coverage for themselves and their family members or pay a tax (sometimes referred to as a penalty) on their individual income tax returns.
2. Beginning last year, individuals and small businesses could purchase health care coverage on an Exchange marketplace. The Exchanges offer private insurance contracts that meet various “metal” levels of coverage – bronze, silver, gold and platinum – with bronze providing the minimum benefits and platinum providing the maximum.
3. Individuals with household incomes that do not exceed 400% of the federal poverty level may be eligible for federal subsidies – referred to as premium tax credits – to buy coverage through the Exchanges. If you offer your employees health coverage that meets ACA standards of affordability and minimum value, your employees are not eligible for premium tax credits.
4. Unless your business is a “large employer,” the ACA does not impose any penalty or tax on your business if you choose not to offer health care coverage for your employees.
5. Important caveat: Even though you have less than 50 full-time employees (100 full-time employees for 2015), you may still be a large employer if there are related businesses whose employees must be aggregated with yours for purposes of the large employer determination.
6. Expanded nondiscrimination rules may impose an excise tax on your business ($100 a day per affected participant) if you offer a health plan with terms that are more favorable to higher paid employees.
7. A federal tax credit may be available to your business for 2014 (and for calendar years beginning back to 2010) if you have fewer than 25 full-time employees, average wages of less than $50,000, and contribute to your employees’ health care coverage. Check with your tax advisor.
8. Department of Labor rules require that you communicate to new employees about the Exchanges and their choices for health care coverage.
9. As a small employer, you may have opportunities to buy health insurance for your business through the Exchanges. Health insurers must offer coverage during open enrollment that does not include minimum participation requirements or take into account the health status of your employees or their family members.