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Health Care Reform:

Health Insurance & Affordable Care Act

Health Care Marketplace for Small Businesses: FAQ

As a small-business owner, you may be concerned about the way the Affordable Care Act, also known as health care reform, will affect your company.

The law offers incentives that may make it more appealing for you to think about adding, or keeping, your workers' health insurance. Offering insurance, though. also may have drawbacks. Here are some questions to consider if you are an employer with fewer than 50 employees.

I own a supermarket with about 40 employees. Am I required by law to provide health insurance for them? Will I face a penalty if I don't?

No. The employer mandates you've heard about are for businesses with 50 or more employees. Starting in 2015, large employers who don't offer health insurance may have to pay a penalty.

Since your business has fewer than 50 full-time workers, you don't have to pay a penalty if you don't offer them insurance.

I own a restaurant with quite a few part-time workers. How do I determine whether I have the equivalent of 49 full-time workers?

The law considers a full-time employee to be someone who works an average of at least 30 hours a week.

To figure out the number of full-time equivalent employees, add up all the hours paid to part-time employees in a week and divide by 30 (the number of hours considered to be full-time). This will give you the number of full-time equivalent employees the part-time workers represent. 

You can also have a mix of full-time and part-time workers that adds up to the equivalent of 49 full-time workers. For instance, you could have 50 half-time workers (which is equivalent to 25 full-time workers) and 24 full-time ones. Other combinations can give you the same results.

If you have the equivalent of 50 or more full-time workers, you still only have to offer insurance to the full-time workers, not part-time workers.

I'd like to consider offering health insurance for my business with fewer than 50 workers. Can I find insurance for them in the new Marketplace being set up in my state?

There are two types of Marketplaces, also known as Exchanges, that are being set up in each state. One Marketplace is for individuals looking for insurance. If you do not offer health insurance through your business, your employees can buy coverage through the individual Marketplace. And they may qualify for a tax credit to help them cover the cost.

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