Affordable Care Act
November 6, 2014
This information is provided for informational purposes only. Nothing in this blog article is intended to be legal or tax advice. Readers should consult an attorney or CPA, and discuss how the issues presented relate to and can impact their individual businesses affairs.
The Affordable Care Act (“Obamacare”) and Smaller Business
Who Must Enroll Employees?
This article will not address the concerns employers with more than 200 employees may have about the Affordable Care Act, except to say if your company has more than 200 employees, they must enroll eligible employees in their healthcare plans.
What’s a Full-Time Equivalent Employee?
The term “full-time equivalent” (FTE) refers to the full-time equivalent of a company’s part-time employees. It is often used to calculate the size of an company based on hours worked by all W-2 employees. (zanebenefits.com) If you want to work out how many FTEs your business has, I suggest you use the SHOP Marketplace FTE calculator.
More than 49 Employees?
Under Obamacare, if you have 50 employees or more, you have the option of either paying a penalty (which the Supreme Court has ruled is a kind of tax) or you can provide health insurance to your company’s employees.
The first thing you need to do is figure out how many FTE Employees you have. If you have more than 49 FTE employees, you have to provide “affordable” insurance to your employees. “Affordable,” in this context is defined as 60% or more paid-for by the employer. Also, your employees must not be required to spend more than 9.5% of their pre-tax income on the healthcare coverage you provide to them, or else you’ll have to pay a penalty.
Failure to provide “affordable” healthcare to your employees will result in your business being required to pay an assessment–a fee that ostensibly offsets the cost of the premium tax credits employees receive from the government to pay for their own health insurance.
The annual penalty for each employee over a 30-employee threshold is $2,000. This still might be less expensive than providing “affordable” healthcare coverage to your employees. Talk to your accountant and do a careful cost-benefit analysis before making your decision.
Really Small Businesses–Fewer than 26 Employees
If your business employs 25 or fewer people, and if the average annual wages of your employees is under $50,000 per year, and if your business covers at least 50% of your employees’ healthcare insurance costs (based rates for a single person), you must file Form 8941 with your business tax return, and you will qualify for the Small Business Tax Credit in the Affordable Care Act. The amount of the credit is equal to 50% of your business’s healthcare insurance costs.
Essential Health Benefits
There is a list of health benefits the U.S. Dept. of Health deems essential. “The essential health benefits include at least the following items and services:
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (such as surgery)
- Pregnancy, maternity, and newborn care (care before and after your baby is born)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services”
Get More Help Shouldering the Burden of Obamacare
“The Affordable Care Act was supposed to make health care more affordable, but a study of insurance policies before and after Obamacare shows that average premiums have skyrocketed, for some groups by as much as 78 percent.” (WashingtonTimes.com) Whatever your opinions may be about what healthcare reform should look like, the available empirical evidence suggests businesses have never had a more difficult time doing business in America, and Obamacare has made their burden heavier than ever before.
If you need to consult an attorney about your business’s compliance with the Affordable Care Act, please contact Executive Legal Professionals at (615) 669-6566. A licensed attorney will be happy to speak to you about your regulatory compliance concerns, and help you make sure you’re on the right track.
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