Having celebrated its third birthday this past March and the one-year anniversary of the Supreme Court decision upholding the law this past June, the Affordable Care Act continues to be a work in progress. To help you keep up with the requirements under the Act, this article will provide an overview of the topics most relevant to small businesses based upon the information available today.
Providing Health Coverage
No employers are required to provide health coverage under the Act. However, employers with 50 or more employees may be subject to penalties if they do not offer health coverage or if they offer coverage that does not provide a minimum level of coverage by January 1, 2015. If you have more than 50 employees, you should consult a tax or benefit advisor to determine the best approach for you and your employees. Under the Act, small employers are not required to provide any health coverage or to pay any penalty. They should, however, consider how a decision to provide, or not provide, health coverage will impact their ability to attract and retain employees.
Small Employer Tax Credit
If your small business has fewer than 25 full-time equivalent employees, pays an average annual wage below $50,000 and contributes at least 50% toward employee-only health insurance premiums, you may be eligible for the small employer tax credit that went into effect in 2010. A tax credit of up to 35% was available to offset the costs of insurance for tax years 2010, 2011, 2012 and will again be available for 2013. The credit amount will increase to 50% in 2014, and will only be available to qualified small employers who participate in the Small Business Health Options Program. The tax credit of up to 50% may be claimed for two consecutive tax years starting with 2014.
Small Business Health Options Program (SHOP)
Available to small employers with 50 or fewer full-time equivalent employees, the Small Business Health Options Program (SHOP) is a marketplace for buying health insurance. The marketplace allows small employers to pool their risk. This is anticipated to result in plans offering greater coverage options at a lower cost. Employers can start enrolling in SHOP as early as October 1, 2013 for coverage starting as soon as January 1, 2014. To be eligible, employers must offer coverage to all full-time employees (generally those working an average of 30 hours or more per week). Some states require a minimum percentage of full-time employees to enroll in the plan. Information about SHOP may be found online at www.healthcare.gov or small business owners with 50 or fewer employees may call 1 800 706 7893 (TTY users: 1 800 706 7915) Monday through Friday 9 a.m. to 5 p.m. EST. Your insurance broker should be a good resource for you as well.
Requirement to Notify Employees of Health Insurance Marketplace
Do you have at least one employee and at least $500,000 in annual volume of business? If the answer is yes, your small business must meet the notification requirements for the Health Insurance Marketplace. This includes providing notice that the Marketplace exists, that employees may be eligible for a tax credit if they purchase coverage through the Marketplace and that employees may lose the employer contribution to their premium if they purchase coverage through the Marketplace. Covered employers must provide the notice to all current employees by October 1, 2013. Sample notice letters may be found on the Department of Labor website.
Summary of Benefits and Coverage Disclosure
If your small business provides a health insurance benefit to employees, a new requirement went into effect for open enrollment periods that started after September 22, 2012. Under the Act, employers must distribute a uniform summary of benefits and coverage (SBC) form explaining what the plan covers and associated costs. You should be able to get this form from your insurance agent. Samples of the form may also be found on the Department of Labor website.
“Play or Pay” Delay
While the mandate that individuals have health coverage as of January 1, 2014 or be subject to a penalty remains in effect, the mandate that large employers offer health coverage that provides a minimum value or pay a penalty has been delayed for one year. The large employer “play or pay” mandate will not go into effect until January 1, 2015.
What Else Do I Need to Know?
Remember, the Affordable Care Act passed in 2010 and many provisions have already gone into effect. If you have not evaluated requirements under the Affordable Care Act and how they may impact your small business, consider talking with an accountant, benefits specialist, broker and/or attorney. You may also want to visit www.healthcare.gov and www.sba.gov for additional information. Or contact me at Affinity HR Group, LLC ([email protected]).
By Staci Bloomberg, Executive Compliance Consultant with Affinity HR Group
