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. Larger 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 50 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.
Your mix of full and part-time workers may not lead you to have to offer insurance. 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 my state's Marketplace?
There are two types of Marketplaces, available 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.
The other Marketplace, called SHOP (Small Business Health Options Program), is for small-business owners like you. Some states work in partnership with the federal government or run their own SHOP. Others rely on the federal government to run the SHOP for their residents through Healthcare.gov. You can log on to Healthcare.gov to find the SHOP for your state. You can compare plans online, apply and enroll on your own or with the help of an insurance agent or broker. You will be able to compare the costs and benefits of the plans in SHOP and then select the plan or plans to offer your workers (employee choice options vary by state). All the plans that are offered in SHOP will use a standard format to explain their coverage and prices. And they will all use plain language to describe their policies.
Through your state's SHOP, you will select the level of coverage you want to offer your employees (bronze, silver, gold, or platinum) and how much money you wish to contribute to the cost of their insurance. If you offer employee choice, your employees will then be able to select from the range of plans that meet the criteria you have set.
I already provide insurance for the 24 employees of my art supply company. Can I keep offering the plans we have now?
Yes, you can continue to offer your current health plans to your employees. These plans won't need to offer some of the new benefits that are required by the health reform law if they are "grandfathered." Your company's plans may be considered "grandfathered" if they existed on March 23, 2010, and have not substantially changed. Whether your health plan is grandfathered or not, you can keep your current plan as long as your insurance company continues to sell it.
However, there are situations that could make the health plan you offer lose its "grandfathered" status. For example, if the plan makes major changes, such as significantly cutting benefits or raising the premium or cost sharing, it will lose its "grandfathered" status.
I'm on the fence about whether I should provide insurance for the employees of my small printing shop or let them buy it on their own. Why should I offer it?
Here are some benefits of offering health insurance to your employees:
- It can help you attract and keep good workers who might otherwise go to a competitor who offers health insurance.
- Health coverage can help keep your workers healthier and more productive.
The amount you contribute to your workers’ health insurance is not included in their taxable income.
You may qualify for a tax credit towards the amount you pay for your employees’ premiums.
Will I be hurting my employees if I don't offer health insurance? Should I let them buy it on their own?
Here are some reasons for not offering health insurance to your employees:
- If the insurance you offer is considered affordable (premiums are less than 9.78% of your employee’s income) and meets minimum standards, lower-income workers will not qualify for subsidies to buy individual health plans through state-based insurance markets.
- When you offer family coverage, dependents who could find cheaper policies in the individual exchange are often disqualified from taking advantage of tax credits (again, if your insurance meets affordability and minimum standards).
I run a funeral home with six employees. Can I get any help from the government for paying their premiums?
Yes, you can get tax credits to help pay for premiums, but you have to meet certain conditions.
You can get tax credits if:
- Your business has fewer than 25 full-time employees.
- Your workers' average wages are less than about $54,000 per year. (this is indexed for inflation
- Your business contributes at least 50% of the cost of a premium for an individual plan in a Marketplace.
You can get a tax credit for up to 50% of the amount your business pays toward insurance premiums for employees.
One of my employees has had cancer. Will this affect my ability to get insurance for my small business?
No. Insurance companies can't deny coverage to your business due to the health of an employee or a family member. And if someone who's covered develops a serious condition later, your insurer can't cancel your plan.
In the past, if you had an employee who was seriously ill, the premiums in your company's health plan might have gone up. Health insurance plans can no longer raise premiums based on the health of anyone in your company.