You small business owners and entrepreneurs are a smart, busy bunch of people. Surely, you are aware that health care reform will take full effect in 2014, changing your health insurance options in an historic way. But – do you have a firm grasp of how?
Whether or not the Supreme Court will find the individual mandate to be unconstitutional is still up for grabs, but the various other parts of the Patient Protection Affordable Care Act (PPACA) are expected to move forward. Don’t wait until the last minute – educate yourself on health reform and the new options ahead. We’ll start the conversation for you.
Exchanges
Health care reform calls for the creation of new, state run organizations that will provide an organized, simplified way of comparing health plan rates and coverage. These exchanges will also act as a resource for information on health insurance, providing answers to any questions you might have.
Penalties
- Large businesses (more than 50 employees) are not required to provide health insurance for their employees, but they could face a penalty.
- The penalty occurs because in lieu of being offered coverage through work, your employees will have to purchase individual health insurance, for which they will receive premium tax credits from the insurance exchanges.
- The maximum penalty large employers could face is $2,000 for each full-time employee.
Not all small businesses will be affected by reform
A small business is defined as one with fewer than 50 employees. There are over 27 million small businesses in the United States at this time.
- If you own a small business, you are exempt from the new health care laws. Repeat – you are exempt. This means you are not required to offer your employees health insurance and you are not subject to any sort of fines or penalties.
- If you decide you would like to offer your employees health insurance, you can take advantage of the brand spanking new small business tax credit.
How the small business tax credit works
- Small businesses that provide health insurance to their workers are eligible for tax credits. These work on a sliding scale as long as the business has up to 25 employees and pays average annual wages below $50,000.
- As of right now, small businesses are eligible for a 35 percent tax credit. As of 2014, the tax credit increases to 50 percent. However, this maximum credit will only be granted to business with less than 10 employees whose average annual wages are less than $25,000.
