By Allen Foster
The Affordable Care Act is responsible for causing more confusion than the series finale of “Lost.” According to obamacarefacts.com, the ACA is a U.S. healthcare reform law that was designed to focus on the following four key points: to provide more Americans with access to affordable health insurance, improve the quality of health care and health insurance, regulate the health insurance industry, and reduce health care spending in the United States.
If you have a small business, one with under 25 employees, the rules are not quite the same. The first and most potent difference for employers with fewer than 25 employees is that they are exempt from penalties. In other words, the mandate for offering healthcare coverage does not apply.
However, there are appealing tax credits available to the small business owner who does comply. In order to be eligible for these credits, healthcare.gov lists the following four criteria your company needs to meet:
- You must have less than 25 full-time employees.
- The average salary for your employees must be less than $50,000 per year.
- Your company must pay a minimum of 50 percent of your employees premium costs.
- Your company must offer coverage to full-time employees through the Small Business Health Options Program (SHOP) Marketplace.
You can enter your company’s details into an online tax credit calculator on a trusted site like healthcare.gov to discover your potential tax credit. In short, the smaller your business, the larger the credit.
Additionally, according to sba.gov, there are a number of other provisions that may impact businesses with less than 25 employees. These provisions include, but are not limited to:
- Employer Payment Plans – Essentially an employer gives an employee additional money in his or her paycheck with which to purchase their own plan, thus placing the responsibility of having healthcare coverage on the employee.
- Limits on Flexible Spending Account Contributions – This places a cap, which is determined by the IRS, on how much an employee can have deducted from his or her paycheck each year in order to help cover medical expenses. This is important to small businesses because flexible spending accounts are an employer risk program.
- 90-Day Maximum Waiting Period – As of January 1, 2014, the maximum waiting period for individuals eligible for health coverage is 90 days.
Note: Whenever seeking answers to complicated questions involving healthcare, be sure to verify any and all information you receive from a trusted government resource.