Small Business and Health Care: What you need to know as a Small Business
Thursday, November 29, 2012
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.
- 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 HealthCare.gov "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%.” (healthcare.gov)
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
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
- 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.” (healthcare.gov) 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.” (healthcare.gov)
- 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.”
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.”(healthcare.gov)
Big Question: How much is this going to cost?
Answer: The honest answer is, we don’t know. While the
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.
Affordable Insurance Exchange Grants Awards List
the Department of Labor
Timeline for What’s Changing and
Retiree Reinsurance Program (ERRP)
Workplace Health Program