One of the most prominent questions facing small businesses in 2013 and 2014 is, “How will I be effected by ObamaCare?” While the answers themselves are too plentiful to answer here, we wanted to take a minute to provide a basic overview to give our clients an idea of what to expect.
First, if your small business has more than 50 full-time employees, you will be required to purchase health insurance for every employee or pay a penalty to the federal government ($2,000-$3,000/employee). This means that, starting January 2014 you must pay at least 60% of covered health care costs on insurance plans that meets the minimum designated level and which “employee responsibility” may not exceed 9.5% of their family income.
Second, if your small business has fewer than 25 full-time employees, you will actually receive tax breaks and credits through the SHOP Exchange (“Small Business Health Options Programs”, special state organizations set up to help small businesses and individuals find and purchase health benefits). You can actually apply for tax breaks of up to 35% (25% for nonprofits) of the cost of employee premiums for every worker whose average annual wages are less than $50,000 and for whom the business pays at least 50% of these insurance plan costs. The tax break percentage increases to 50% (35% for nonprofits) in 2014.
Third, if you are a small business making less than $250,000 in taxable profit, you are exempt from the new .9% increase in Medicare taxes that will be paid by larger organizations.
Next, there will be an annual pre-existing fee of $63/employee. This fee will decrease annually through 2017 when it will eventually be phased out. Small businesses have the option of passing this cost on to employees.
Finally, employer plans that offer health insurance benefits to retirees ages 55-64 will be able to apply for and receive assistance via the Early Retiree Reinsurance Program.
Ultimately, Obamacare will roll out over a 4 year period from 2013-2017. Health insurance exchange open enrollment for small businesses and individuals will begin on October 1, 2013. During this time, the state health options programs exchanges will officially be “open for business” offering Qualified Health Plans (QHPs) from several insurers on a side-by-side comparative basis.
These are just a few of the most basic aspects of the coming Obamacare initiative. We will be researching and sharing additional articles on this subject over the course of this year. If you have any specific questions about how this will affect your small business, please contact us immediately at 866-496-2042.