Health Care Reform and Small Businesses

Following the affirmation of the Affordable Care Act (more commonly known as Obamacare) this summer by the Supreme Court, CompTIA began to see an uptick in interest from its members as to how this law would affect their businesses. Since its controversial passage in March of 2010, ongoing challenges to the constitutionality of the reform measure led many businesses to take a wait-and-see attitude. Now that the law has been upheld, it’s time to take another look at how small businesses might be affected.

The law will not be fully implemented until 2014. However there are some relevant events for small businesses that will occur in 2013.  Beginning on October 1, 2013, open enrollment will begin for individuals and small businesses (with 100 or fewer employees) for insurance exchanges. These exchanges are intended to provide lower costs and better plan selection. Each state has until November 2012 to determine whether it will operate an exchange. If a state opts not to operate an exchange, enrollees can participate in a federal exchange.

There are also some tax implications for employers that currently provide health care coverage.  Small employers (generally those with fewer than 25 full-time equivalent employees with an average wage of less than $50,000 a year) will qualify for up to a 35 percent tax credit against employee insurance costs; this credit will increase to 50 percent in 2014.

Another change for 2013 requires employers to report the costs of healthcare benefits received by its employees for the 2012 tax year (on the W-2 issued in January 2013).  The intent is to make employees more aware of the employer cost of provided insurance benefits.

However, for many small employers, the question remains whether their businesses are exempt from the law. Generally, businesses that have 50 or more full-time employees are required to provide coverage. The penalty for not doing do is $2,000 for each employee over 30 full-time employees. So, while the penalty does not kick in until a business has 50 employees, the penalty would then apply to those employees in excess of 30. There are many details concerning how part time and seasonal workers are counted, but the general rule is those employers with less than 50 employees would be exempt.

We hope you can join us for a webinar scheduled for Wednesday, October 31, 1:30 – 2:30 pm CT, on “Your Bottom Line: What Healthcare Reform Means For Your Small Business.” This webinar will help attendees sort out the effects of health reform on their small businesses. For more information and to register, click here.