The Affordable Care Act (ACA) is commonly called ObamaCare because it was enacted by President Barack Obama in 2010.This Act has introduced significant changes to the health care system available to United States citizens and residents.
In order to determine how the Affordable Care Act affects you, you need to know what kind of employer you are in the eyes of the Internal Revenue Service (IRS):
- Are you self employed?
- Do you employ less than 25 people?
- Do you employ less than 50 people?
- Do you employ more than 50 people?
Your answer will determine the plans and policies required to ensure compliance.
For example, you are only required to provide group health insurance if you employ 50 or more full-time equivalent workers (or the equivalent in part-time workers). If you fall into this category, and do not provide coverage, your business will incur a penalty. Be sure to take advantage of the Employer Shared Responsibility Provision (ESRP) Estimator offered by the IRS. This service was created by their Taxpayer Advocate Service, and it can help you to determine the responsibilities and liabilities of a large business owner as it relates to the Affordable Care Act. For further information, please visit this website and watch this short video.
On the other hand, if you have fewer than 25 full-time equivalent workers who make an average of $50,000 per year (or less) and choose to offer health care coverage you may qualify for health care tax credits under the Small Business Health Options Program (SHOP). For complete details, please visit this website.
Tips For ALL Business Owners
- Consider offering Health Savings Accounts (HSAs) as a means of helping employees to cover their medical expenses. The fact that HSAs are tax-free makes them even more appealing. Please take a look at the blog post we wrote about HSAs this past summer for further information.
- If you do not have the time or expertise to select and manage health insurance policies for your small business, consider outsourcing this service to a professional organization. ZipRecruiter has an interesting article detailing the benefits of working with an independent health insurance broker.
- Negotiate with your insurance coverage provider for the best possible rates and services. Again, if you lack the skills required, it might be a good idea to work with a broker to increase your chances of getting a plan that will work for you and your team members.
- Think outside the box and look at concierge medical facilities. It might work out to be more financially beneficial to get a group rate with one in your area – than to pay for traditional health insurance.
- Closely monitor your staffing levels if your small business employs close to 50 full-time equivalent employees. If you are not offering coverage, but reach the threshold, you will likely incur high penalties.
Here at Remote Quality Bookkeeping™, we make it a priority to stay abreast of issues that affect small businesses. Please contact us if there is any way we can help you to succeed.