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News & Press: Arizona Business News Updates

Small Business and Health Care: What you need to know as a Small Business

Thursday, November 29, 2012   (0 Comments)
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With Obama’s re-election, the Health Care Act is here to stay. Here are some things to help guide your small business through the seemingly confusing, and often misunderstood, legislation.

General Information:

  • There is no employer mandate in the legislation, meaning that no employer is required to offer insurance to their employees, nor is there a tax increase on small businesses for health care.
    • However, a "shared responsibility fee” may apply to some companies starting in 2014. Please see "Starting in 2014” for more details and links.
  • As of September 2012, insurance companies are now required to justify rate increases to the State or Federal government.
    • Proposed increases need to be reviewed by either State or Federal experts to determine whether they are reasonable. In Arizona, reviews for individual or small group market increases will be done by the Federal government (specifically, The Department of Health and Human Service), as there is no effective system in place to review for those markets.
    • According to "This has contributed to a decline in rate increases; in the last quarter of 2011 alone, States reported that premium increases dropped by 4.5%.” (
  • · W2 reporting is required for almost all businesses for 2013, but not for 2012.

Businesses with the equivalent of 25 full time employees:

  • You can receive a tax credit of up to 35% through 2013. To be eligible for a tax credit:
    • have the equivalent of 25 full time employees. Every two part time employees equals one full time employee; so 50 part time employees = 25 full time employees.
    • you must cover at least 50% of the cost of single (not family) health care coverage for all of your employees.
  • For small tax-exempt employers:
    • Through 2013, the maximum tax credit will be 25% of employer contribution
    • "The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.”(

Examples of Tax Credit

Starting in 2014:

  • Small businesses with the equivalent of 25 or less full time employees can receive a tax credit of up to 50%. (Same eligibility as before applies.) Tax exempt employers will receive a 35% credit.
  • Small businesses with 100 employees or less can shop the Affordable Insurance Exchange.
    • Exchanges can be run by the State or by the Federal government. As of November 28, Governor Brewer has elected for Arizona to participate in a federally-operated Exchange. "Affordable Insurance Exchanges will provide individuals and small businesses with a "one-stop shop” to find and compare affordable, quality private health insurance options.” ( In this case, the Arizona Exchange will be run by the Department of Health and Human Services (HHS), not the state.
    • See: "Small Business (SHOP) Exchanges. Small business customers offer unique challenges but also powerful opportunities for Exchanges. Successful Exchanges will streamline the process for small businesses. Federal rules will provide a framework for SHOP Exchanges, including options for how employers can provide contributions toward employee coverage that meet standards for small business tax credits.” (
  • The Affordable Care Act will require "large employers to pay a shared responsibility fee only if they don’t provide affordable coverage and taxpayers are supporting the cost of health insurance for their workers through premium tax credits for middle to low income families.”
    • However, "the law specifically exempts all firms that have fewer than 50 employees – 96 percent of all firms in the United States or 5.8 million out of 6 million total firms – from any employer responsibility requirements.”(

Big Question: How much is this going to cost?

Answer: The honest answer is, we don’t know. While the nonpartisan Congressional Budget Office estimates that the Health Care Act will cost the Federal government about $938 billion over 10 years, it should also reduce the Federal Deficit by $138 billion over the same amount of time.

But you should continue keeping abreast of the news regarding health care and look out for something called "Navigators”, government paid for individuals there to guide you through the insurance process and find the right policy for your business.

Helpful Links:

· Affordable Insurance Exchange

Arizona Affordable Insurance Exchange Grants Awards List

· FAQ from the Department of Labor

· Timeline for What’s Changing and When

· Early Retiree Reinsurance Program (ERRP)

· Comprehensive Workplace Health Program

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