The new health insurance reform bill might mean big changes for your business -- or not. Learn how it affects you here.
If you are a small business owner you have probably wondered what the Affordable Care Act means for your business. Before you make any changes to your group health insurance learn what the new law means for you.
If you run a small business there is a good chance that the new law doesn’t affect you at all. If you have a staff of less than 50 employees you do not have to make any changes. You are exempt from the law.
For firms with over 50 employees, here are some basic rules you should know:
- If you offer health insurance to your employees, don’t worry. The new law won’t affect you much.
- If you don’t offer health insurance you must pay a fee of $2,000 for every worker in your employ if even one of your employees receives a government subsidy to buy health care.
- The first 30 employees are deducted from the above fee.
- If you have employees making less than 400 percent of the federal poverty level who spend between 8 and 9.8 percent of their income on health insurance they have the right to purchase insurance on an exchange. You must provide these employees with a free choice voucher equal to what you would have paid for insurance otherwise.
- If your firm employs more than 200 people and offers health insurance all employees must be enrolled in the plan, unless these employees have alternate forms of coverage.
- Enrolled employees’ children may remain on their parents’ plans until their 26th birthdays.
- All changes take affect on January 1, 2014.
- Plans with aggregate coverage values of over $8,500 for an individual or $23,000 for a family plan are subject to an excise tax of 40 percent on all benefits in excess of these amounts.
- Waiting periods likewise incur a fee. After 2014, you must pay a fee of $400 for every employee in the midst of a 30 to 60 day waiting period and $600 for every employee waiting between 60 and 90 days.
Evaluating Your Plan
It’s not a foregone conclusion that you must offer insurance to your employees. First of all, as stated above, the law does not affect small business. Further, even if you have more than 50 employees, it might be more cost effective to not provide health insurance. There are two cases where this might be true:
- If all of your employees earn more than 400 percent of the federal poverty level, you will incur no penalty for not providing coverage.
- If group insurance health care plans will cost you more than the $2,000 fine, you might be better off not paying for health insurance and taking the hit.
These will not be the final determiners as to whether or not you provide coverage. They do, however, act as a guide to whether it is economically advantageous for you to provide group health insurance for your employees.
To Provide or Not to Provide
Whether or not you provide health care coverage for your employees is a complicated issue. The final decision is not a result of a pure cost analysis. Remember that having a competitive benefits package is part of attracting the top talent. Still, familiarizing yourself with the changes in the law will allow you to avoid paying fines that aren’t part of a cost-benefit analysis.