Health Care Reform provisions impacting small businesses. Below are several provisions of the Health Care Reform bill that will directly impact small business within the next year.
Small Business Health Insurance Exchange (SHOP)
Starting on January 1, 2014, all small businesses will have the choice to purchase insurance through the SHOP Exchange (a small business version of the Health Insurance Exchange.) The exchanges/marketplaces will provide small businesses and individuals a way to purchase health insurance through their states online insurance market place. Companies still have the option of continuing to purchase insurance directly through the providers, like they do today, without going through an exchange.
The term and definition of small business will be defined by each state. In order for a business to use the SHOP it must be considered a small business by the State, which it resides in. The two options available to each state are 1) Small Business (1-50 Employees), 2) Small Business (1-100 FTE)
Small Business Health Insurance Tax Penalty
Currently small businesses are not required to provide health insurance coverage, however starting in January 1, 2014 any business with 50 or more employees working more than 30 hours per week will be required to provide health coverage or pay a health insurance tax. The health care coverage provided must adhered to specific rules including, coverage of at least 60% of the cost of the benefit, less than 9.5% of their household income.
- Business with 50 FTE (Full Time Employees) or less employees Tax Amount: Exempt
- Business with Part-Time (30 or less hours per week) Tax Amount: Exempt
- Business with 51 FTE or more Tax Amount: $2000/ employee starting at the 31st employee)
Note: If an employer does not provide sufficient insurance, and their employee purchase health insurance on their own through the exchange, they will pay the $2000 penalty for the excluded employee. However if the employee receives a tax credit or subsidy from the government, the employer will be charged a fine of $3000 for that employee.
Contact us today to work with you on all the Provisions of the Health Care Reform Bill that will impact your small business.