The impact of the Affordable Care Act has been positive since being enacted into law. The Affordable Care Act is achieving the goals it set out to accomplish; getting more Americans to sign up for health insurance at an affordable rate.
However, no plan or law is perfect. Even with bipartisan support, the Affordable Care Act has had its fair share of dissenters. Small business owners in particular have had issues with the Affordable Care Act. While they might agree with the goal of the law, small businesses are feeling a squeeze in order to be ACA compliant.
What Constitutes a Small Employer?
Small employers according the to the Affordable Care Act is any business that has fewer than 50 full-time employees. This distinction is significant because any companies over 50 full-time employees are subject to the employer mandate.
The employer mandate is part of the Employer Shared Responsibility provision. It states that businesses with more than 50 full-time employees must provide minimum coverage health insurance to at least 95% of their employees and dependents up to the age of 26. Failure to do so will result in a $2000 a person fine.
This is one of the major reasons why employers are feeling financial pressure from the Affordable Care Act. Mandatory coverage or fines means the business is paying more annually, no matter what.
ACA Compliance Concerns For Small Employers
- Properly Structured Benefits Plan – Employers must ensure the health plan meets requirements for a plan structure. Like group plans must cover preventive care without cost-sharing and not have a yearly or lifetime limit on health benefits.
- Notice of Exchange Management – It’s required that employers provide notice to their team about the availability of the Affordable Care Act marketplaces. Here’s a notice template you can use.
- Minimum Essential Coverage – All individual have to have minimum essential coverage. How can employers help employees find health insurance in a compliant manner?
- Eligibility and Enrollment Requirements – Any company offering health benefits much make sure that new eligibility and enrollment requirements are followed.
- Properly Calculating Full-Time Equivalent Employees – If your business is nearing 50 employees, are you defining a full-time employee properly? Or will you actually be on the hook for more employee health insurance?
- 90-Day Maximum Waiting Period – Employers must offer health insurance to all eligible employees within 90 days of their start date.
- Flexible Spending Accounts – Employees are limited to $2,550 in FSA contributions. Employers don’t have such a restriction. They do have two options to let employees carry their funds over to the next year, these options can be found here.
Small Business Health Options Program (SHOP)
Not all news is bad news for small businesses with the Affordable Care Act. The law actually offers incentives, like tax breaks and credits, for small businesses with less than 25 full-time employees, making less than $50,000 a year to help them provide health benefits. Tax breaks for employers that use SHOP can get tax breaks up to 50% on employee health insurance.
2016 is a big year for small business under the Affordable Care Act. After the employer mandate was pushed back in 2014, it’s finally time to go into effect. This means more changes for small business owners. Make sure that you know your responsibilities to your employees so that you don’t accrue unnecessary fines.
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