Obamacare Small Business Quick Start Guide
Whether you’re angry, happy or just plain confused about how “Obamacare” (a.k.a. the Affordable Care Act, or ACA) will impact your business, my best advice is this: Get over it!
By Daniel Kehrer
Official start date is January 1, 2014, but some provisions are already in place (such as healthcare tax credits for small biz) with more coming soon. Time to buck up and figure out what it means for your business, what steps you need to take and how you’re going to deal with the changes.
Many business owners and entrepreneurs are still in “wait and see” mode. That could be a mistake if you end up overpaying for existing coverage, or want to get first time coverage and face health expenses before getting your coverage in place.
Details of healthcare reform are starting to unfold. The U.S. Small Business Administration, for example, has launched a new website (SBA.gov/healthcare) and blog (sba.gov/blog) devoted exclusively to explaining it for small business. And while the SBA’s take on ACA is certainly biased to the upside, this new resource does offer a helpful gateway to information about how it will work.
Keep an eye out for something called the Small Business Health Options Program or SHOP. This program, launching in October, is designed as a (relatively) hassle-free way for you to find health insurance. If it works as promised, you’ll be able to choose the coverage level you want, what portion of employee costs you want to pay and tap available tax credits. You can sign up to receive email updates about SHOP at the HealthCare.gov website. Select Small Business from the tab labeled Prepare for the Health Insurance Marketplace.
Starting in 2014, you or your small business can also get insurance through a new type of non-profit, consumer-run health insurer called a Consumer Operated and Oriented Plan (CO-OP). As with other co-op setups, these insurers will be run by their small business and self-employed customers themselves. Such CO-OPs are meant to offer consumer-friendly, affordable health insurance options to small businesses and must meet the same state and federal quality and financial standards as other plans. You can find more at the HealthCare.gov website.
Here are some key provisions based on the size business you are, from self-employed to 50+ employees.
Health insurance coverage for the self-employed will be in place and available through a new competitive health insurance marketplace in each state no later than January 1, 2014, with open enrollment starting October 1, 2013. You’ll be able to choose from four levels of coverage that pay different percentages of your costs.
One provision already in place is a tax credit (way better than a simple deduction) for small businesses with fewer than 25 employees that pay a portion of employee health premiums and meet other criteria. Right now, the credit maximum is 35% of what you pay for coverage and that will go to 50% in 2014.
Small Business Majority, an advocacy group for small business, has a handy Health Care Tax Credit calculator on it’s website. You’ll see it on the right side of the homepage at: SmallBusinessMajority.org.
Also starting in 2014, businesses with fewer than 50 employees can use the SHOP system to secure coverage. The assumption is that competitive pricing and pooled purchasing will lower costs significantly, although that’s yet to be seen. Right now, small businesses pay about 18% more on average than big companies for equivalent coverage.
This is where mandates kick in. Starting in 2014, businesses with more than 50 full-time (defined as working 30 or more hours weekly) employees must offer health insurance or pay an “assessment.” The details of this “Employer Shared Responsibility” and other ACA tax provisions are available on the IRS website at IRS.gov. See Affordable Care Act Tax Provisions under “Hot Topics.”
Starting in 2016, businesses with up to 100 employees will be able to buy health coverage through SHOP.
Here three other helpful features available on the HealthCare.gov website:
Timeline for implementation: What you need to do and when.
State-by-state breakdown of new healthcare options for small businesses.
A glossary of healthcare act terminology.