How Obamacare Still Affects Your Small Business
Everyone has an opinion about the Affordable Care Act (ACA), or what’s more commonly known as Obamacare. But, at this point, if you own a business, it’s time to stop spouting opinions and start educating yourself about you and your employees’ rights, so you can make sure you’re compliant from the get-go. Plus, the more you plan ahead, the more smoothly your entire human resources component will grow alongside your business.
Today, we are offering you an overview of how the ACA affects your small business, and how you can integrate and automate your human resources to stay compliant (and sane!) in the process. This is all so you and your employees can prepare for the worst and hope for the best.
How does the ACA affect my business?
Starting in 2014, all U.S. citizens and legal residents are required to have health insurance. There’s been a lot in the news about how this affects individuals, health insurance providers and larger companies, but there hasn’t been a lot about smaller businesses.
These are the three main categories of business size for the ACA:
- 200 or more full-time employees: must automatically enroll employees, except those who opt out.
- 50 to 199 employees: must offer health coverage.
- Fewer than 50: are essentially exempt.
But since your small business isn’t necessarily mandated to offer health care for your employees, that doesn’t mean the ACA won’t affect you too.
“There is a real challenge for small businesses with the ACA. There are more incentives to offer health care, but there's also more paperwork,” said Parker Conrad, three-time entrepreneur and CEO of Zenefits all-in-one HR solution. “That means that there's a huge demand from small business owners to find a way to manage healthcare benefits, comply with the new rules, and not eat up all of their time.”
I have fewer than 50 employees. What if I want to offer them health care anyway?
The ACA makes it easier for you to offer any-size staff health insurance, which is something you might want to do, as it will make it easier to attract and hold onto top talent.
It may also be more affordable than it was before. Thanks to new rules that require coverage for individuals with pre-existing conditions, insurance companies can’t charge you a higher rate if one of your employees has a history of health problems or is already pregnant.
First and foremost, you want to talk with your employees. See if they have health coverage already or if they’d be interested in you providing it. Surveying your employees will help give you an idea of how many will want to enroll and what kind of coverage they’d like, helping you to start estimating costs.
The ACA offers incentives and deals to small businesses who want to provide insurance for their employees. Starting in November of 2014, businesses across the country with 50 or fewer full-time employees will be invited to shop around for healthcare with the federal Small Business Health Options Program (SHOP) Marketplaces for comparing insurance companies and plans. A number of individual state marketplaces are already open.
If you have fewer than 25 employees and you buy everyone’s healthcare via SHOP, you can get tax credits of up to 50 percent of the cost.
Businesses with ten or fewer full-time employees that provide health insurance could be eligible for full tax crediting, but these credits phase out as your company size and average wage increases.
No matter what, if you wish to take advantage of SHOP and its discounts, you are required to supply health insurance for all of your full-time employees.
Another option that many small businesses are going for is purchasing health insurance outside the exchanges, where plans can be more generous and can offer you as the employer more flexibility with whom you cover and how.
However, while there is now a universal access to health care, getting there is more tedious than ever. There’s plenty of burdensome paperwork to fill out and regulations to follow, including how small businesses that choose to offer health insurance are required to report the value of that coverage as part of employee W-2 forms.
All in all, if you are planning to grow your company over the next few years, it may make sense to implement a healthcare plan and other human resources practices now before your business grows too big for its britches.
Why you may be penalized even though you have fewer than 50 employees
Say you have 35 full-time employees – defined as such by working at least 30 hours per week – but then you have 40 employees that work 20 hours a week. Your total full-time employees – based on this government calculator – is greater than 50. This means you may be required to provide health insurance for all your employees, and you definitely will not qualify to use the SHOP marketplace.
I don’t want to provide coverage right now, but simply want to make sure my employees are informed.
Healthcare.gov has a fantastically gamified walk-through that allows both small businesses and families to discover their health and dental care options.
Oy, this is a lot. Can’t a computer do it all for me?
Don’t worry, there’s an app for that! There’s actually a whole slew of different human resources software built with small business in mind. You’re a growing but still small company, and you probably don’t have a human resources department, but rather someone – often the CEO – is in charge of HR activities, which range from hirings and firings, payroll, retirement plans and 401k, and sick and vacation days to your growing responsibilities in offering healthcare coverage. These are obviously important responsibilities, but dramatically distract from his or her main tasks. HR software automates these tasks and more, saving you time and money.
“When you go from five employees to 50 employees,” said Conrad, “there are a whole new set of challenges that businesses need to tackle. Most owners can handle the paperwork at the beginning, but once they start scaling up, they need to be thinking about their people and their products, not HR forms and ACA compliance, and that’s what Zenefits enables them to do.
There are many types of human resources and recruitment software to choose from, based on your company needs. Zenefits is known for its focus on benefits and compliance. Halogen Software is a performance and talent manager that helps you automate training, performance management, and important metrics and incentive plans. Market leaders TribeHR and BambooHR are built to help small businesses handle the day to day of human resources. And if you are looking for a bigger overview of your employee lifecycle from hire to retire or fire, human capital management software like FinancialForce HCM may be the right choice for your business, especially if you have offices in multiple locations.
How do I find the right HR software for my small business?
As with looking for any business software, think about the needs particular to your business. What do you hate doing that you’d love to automate? What’s sucking up the most of your day? What would you like to offer your employees in the future?
When looking for a human resources software, you need to make sure that it can scale along with your company. Suddenly your company could grow beyond ACA’s 50-person mile-marker, and then you’ll be drowning in paperwork and legal requirements. If you implement a software now, you can more easily offer your growing staff healthcare coverage and other employee benefits down the line. HR software makes your staff happy but can also help make sure you’re transparent and compliant.
One such software is Zenefits. Zenefits was created a year ago after Conrad was beyond frustrated running his first two start-ups.
“The idea for Zenefits grew out of my own experience at my previous company. I was spending too much time dealing with HR paperwork and not enough time focused on growing the company,” said Conrad. “The fact is that small businesses need a solution to take all those tasks – like payroll, administering benefits, onboarding, and offboarding – automate them, and get them down to the bare minimum amount of work.”
While many HR software offer solutions for monitoring attendance and payroll, Zenefits takes it a step farther by working with the healthcare providers to ensure you have options and remain compliant.
How much does HR software cost?
Of course, it varies by business app, but most human resources and payroll software charge monthly subscriptions that increase along with your staff. Zenefits is rather unique in the fact that it’s completely free to your small business, by instead earning money from the health insurance companies who wish to be listed within the app.
Is your small business ready for Obamacare?
Let’s face it, we all need healthcare now, which is probably a good thing. How you decide to the react to the Affordable Care Act is your choice, but you’re already halfway there by being better informed and by informing your employees of their rights. Now start acting on that knowledge before it’s too late and you’re stuck under a mound of paperwork and penalty letters!