The ACA is here to stay – and owners and employees of U.S. small businesses need a clear understanding of the impact this revolutionary health care legislation will have on their lives and livelihoods.
ACA in a Nutshell
ACA’s full name is the Patient Protection and Affordable Care Act and its better-known moniker is Obama Care. ACA was signed into law in 2010 to provide more Americans with quality, affordable health insurance, as well as reduce the skyrocketing rate of health care spending in our country.
The Congressional Budget Office estimates that the number of uninsured Americans will drop by 14 million in 2014 as a result of ACA implementation.
The ACA establishes state-specific marketplaces, also known as exchanges, where individuals, families and small business can shop for subsidized health insurance.
You Can SHOP for Employee Coverage
Effective in 2015, businesses with 50 or fewer full-time equivalent (FTE) employees will receive tax breaks for offering health insurance coverage. Approximately $20 billion in total tax credits will be offered to four million eligible employers.
- SHOP – the Small Business Health Options Program – offers increased purchasing power. Currently, small businesses may pay an average of 18 percent more for health insurance plans, due to administrative costs. SHOP provides a better choice of coverage options at a lower cost, as small businesses pool their risks.
- Tax breaks will increase. Employers with 25 or fewer FTEs may receive 2013 tax breaks of up to 35 percent (25 percent for no-profits). In 2014, these percentages increase to 50 percent and 35 percent, respectively.
- To be eligible, you must offer SHOP coverage to all FTEs. The U.S. Department of Health and Human Services (HHS) has a hotline to call for more information: 1-800-706-7893.
More Small Business Implications
ACA is being implemented in stages, with some reforms already in effect and many others phasing in during 2014.
- Employee notices: Employers must provide notifications to their employees regarding their new Health Insurance Marketplace; their eligibility for tax credits; and the fact that if they purchase individual health insurance, they may lose their existing employer contribution. Also required is a Summary of Benefits and Coverage form. The U.S. Department of Labor provides sample notices on its web site: www.dol.gov/ebsa.
- Limits on FSA contributions: The new maximum amount an employee can contribute to a healthcare flexible spending account for any year is $2,500. This does not apply to the employer contribution level.
- Transitional reinsurance fees: Under a three-year program starting in 2014, insurers will be reimbursed for high claims costs. This program will be funded through fees paid by employers for self-insured plans. The HHS estimates that 2014 fees will be $63 a year for each covered individual, with this amount decreasing each year in 2015 and 2016. Fees can be paid from plan assets and are tax deductible.
- Wellness programs: Effective January 1, 2014, the maximum reward to employers offering health-contingent wellness programs will increase from 20 percent to 30 percent. The maximum reward for programs related to decreased tobacco use will be up to 50 percent.
The ACA has far-reaching ramifications on small businesses, their owners and their workforce. To learn more, read our related posts or contact the experts at Alternative Staffing today.