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How Does Obama Care Affect My Business?

Hayley

October 29, 2013

The new health care law is affecting businesses in many ways. It changes how health insurance is managed as well as the responsibilities of certain employers. Understanding all of the aspects of the new law is difficult. Additionally, the law is still evolving. The current health care law will affect businesses in several key ways.

Offering Health Insurance Is Mandatory For Some Employers

The largest effect the Affordable Healthcare Act (ACA) has is that employers with 50 or more full-time workers or full-time equivalents must offer health insurance to anyone working more than 30 hours in an average week. Businesses with less than 50 full-time employees are not directly affected by the law. Employers who do not provide insurance and who do not have a waiver from the government will pay a penalty.

Employer Shared Responsibility Payments

Employer shared responsibility payments are the penalties that businesses must pay if the company does not comply with ACA guidelines. One type of payment occurs if a larger company does not provide insurance at all. The penalty is $2,000 for each full-time employee exempting the first 30 people. This is paid annually until insurance is provided. Additional payments are made if any employee receives a subsidy to cover insurance costs. This penalty is mean to encourage employers to offer affordable health care options.

Tax Credits for Small Businesses

The ACA does make some tax credits available. The most notable are small business tax credits that encourage companies exempted from the law to offer health insurance. The incentive could provide credit for as much as half of the cost of premiums paid. These credits are designed to encourage employer-sponsored coverage and to allow small businesses to remain competitive by offering benefits.

Cost and Benefit Requirements

Another way the ACA affects business is by placing cost and benefit requirements on health insurance plans. Employees cannot pay more than 9.5 percent of income for the plan. The plans must cover preventative care and other specific services. Simple catastrophic coverage plans do not meet these new benefit requirements. Smaller companies can use the new Small Business Health Insurance Options Program (SHOP) to find qualifying plans.

Reporting Requirements

Businesses affected by the ACA have new reporting requirements. The largest change is that employees must have the cost of the health insurance benefits listed directly on the W-2 tax form. This rule will eventually apply to all businesses although it is currently only in effect for companies with more than 250 employees. Employers must also provide coverage and benefits summaries if health care insurance changes.

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