Sept. 23--Hey business owners: How much time do you spend worrying about health insurance for your workers? A lot? Don't have time to answer because you're too busy actually running your business?
You're probably aware that the Affordable Care Act ushers in big changes for how employers provide health coverage, but you may not know what the health reform law means specifically for your retail store, contracting business, farm or other chosen livelihood. The good news is: You might get a tax credit. The bad news is: You might get hit with penalty.
Here are the basics:
One of the most-discussed elements of the ACA is the "employer mandate." Technically, the law doesn't require businesses to offer health insurance, but some companies will have to pay a penalty if they don't offer affordable coverage. That includes businesses with 50 or more "full-time equivalent" employees." (Not sure what that means? Keep reading.) Those entities will be fined $2,000 per worker, excluding the first 30 employees, if they don't offer coverage to employees who average 30 or more hours per week.
There's no penalty for not covering part-time workers.
To avoid the penalty, employers must offer insurance that covers at least 60 percent of employees' health care expenses. The coverage also must be "affordable," meaning an individual employee's premium can't amount to more than 9.5 percent of their household income. If the coverage isn't affordable, employees can apply for tax credits to buy insurance on their own through the health insurance marketplace (formerly called an "exchange") that opens for enrollment on Oct. 1. Employers will either have to fork over $3,000 for each employee receiving the tax credit, or pay $2,000 per employee excluding the first 30 workers (whichever is less).
Do you employ 49 or fewer full-time equivalent employees? Breathe easy; you're exempt. You don't have to provide health coverage to your workers, unless you want to.
The penalties take effect in 2015, a year later than originally planned, after business groups complained about the administrative burden.
Your fast-approaching deadline
You must notify your employees in writing by Oct. 1 about the new health insurance marketplace. This applies to all companies covered by the Fair Labor Standards Act -- generally those with at least one employee and $500,000 in annual volume, so most businesses -- regardless of whether you currently offer health coverage.
To debunk one myth, there's no fine or penalty under the law for failing to notify employees.
The notification should inform all workers about what the marketplace is, that enrollment kicks off on Oct. 1, that they may be able to buy cheaper insurance through the marketplace, and that if they choose a marketplace plan they may lose any employer contribution to their coverage. You must notify all employees, regardless of full- or part-time status and their insurance situation, and all new workers upon hiring.
So, that's an item to add to your to-do list, if you haven't already. Need help? The U.S. Department of Labor has provided some sample notices.
How to get started
How does a small business buy insurance from the marketplace?
-- Sign up at Healthcare.gov/small-businesses, the official marketplace website. The small business marketplace is known as the SHOP, or Small Business Health Options Program. The SHOP is open to employers with 50 or fewer full-time-equivalent employees. It's designed to provide a way to compare prices, coverage and plans in a way that's easy to understand.
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