According to the newest health reform law, believe it or not, if you have 50 or more full-time employees working in your company, you absolutely will have to provide health insurance. It’s a requirement now. The smaller companies -- those under 50 in workforce -- won’t have to, but they still need to inform associates about the law, ensuring new healthcare plans would be in place just in case such businesses wish to offer them.
That’s not all you need to be aware of, though. First off, there’s….
Exchanges: What Are They?
Think of malls and supermarkets. What do you get from them? Options. Think of it from a health insurance standpoint, and you have a recipe for numerous companies shopping around for those ‘options,’ looking for the best buy. That’s what the inevitable health insurance exchange is all about, and they should be effective this year. Keep an eye out for it.
Understanding group coverage, though, would take a bit of education, as the ever-changing law will allow businesses with 100 or fewer hardworking associates the ability to purchase all kinds of health plans through the Small Business Health Options Program (SHOP) exchanges. You still, however, have the option to contract with insurance providers traditionally. The scope is just so broad now that it’s almost overwhelming. Do the proper research to find out what plans might be right for you and your company.
What About the Costs?
If there ever was a scale with weights shifting back and forth, this would be it. Some say the costs will skyrocket; others say it will go down. If you were to strategically evaluate the statistics, you might find that the larger small businesses required to provide health insurance will end up having to spend more. That might not be much of a big deal, though, given the fact that apparently according to many surveys, 90% of businesses with 51 or more employees already provide health coverage.
It’s very black and white, though, and in a bad way: for instance, you might have a particular business crossing that 50-worker threshold and having to pay up a huge $40K hit just for that one employee. The law is the law, and it says what it says.
However, there are ways to circumvent that:
- Don’t Hire
- Terminate More
- Downsize to Part-Time
- Outsource
Sadly, those are negative words in the employment market. In the long run, it saves the companies money.
And the Size and Plan Requirements?
What’s funny is how the line gets blurred between ‘small business’ and ‘big business.’ Quite frankly, according to the new Affordable Care Act, you might still be considered a small business if you have over 50 employees -- yet, you now have to by law provide health insurance. It seems unfair, unless your viewpoint is that of the employee, which ultimately can change the landscape for the labor market as a whole.
It seems that the new law under Obama focuses and favors small business. In fact, you might see the administration stressing that openly.
Still, even the smaller businesses -- even those ran by a single entrepreneur -- have to, by law, provide a set of “essential health benefits,” such as maternity and newborn care, emergency services, mental health and substance abuse services and such concepts as preventive care and prescription drugs.
Are There Any Tax Credits Then?
That’s an obvious question given all the expenses a business would have to pay under the new law. The good news is there are some tax credits available, but only to businesses with fewer than 25 full-time employees. As I’ve mentioned already -- Obamacare seems to benefit the small business quite well, and that’s okay.
You’re looking at a tax credit of 50% on health insurance coverage. Last year, it was 35%. Bear in mind that offering health insurance can be a great way to increase quality of candidacy, thereby increasing the prospects of providing better business, quality of service and product to your demographic. Overall, it can’t be anything else other than good for business, starting from the ground up with your employees and what you provide for them.
Moreover, because the Affordable Care Act will provide those tax credits and subsidies as a way for workforces for many businesses to pay the premiums based completely on the income, there may be opportunities for you as a business to save your associates some funds by sending them to those individual exchanges, in turn saving them money as well.
In other words…. Play your cards right, and you can benefit well.
Other Administrative Requirements and Moves of Which to Take Notice
As if this analysis weren’t over quite yet -- whenever there’s any kind of reform within the law -- in any niche and not just in this particular area -- there’s a lot of ground to cover. As it stands, the Affordable Care Act does require certain provisions, such as the mandate for businesses to report health coverage on W-2 forms, supplying employees with a general summary of benefits coverage.
Other issues may not have a considerable effect at all on how money is figured, such as the limitation now for employee annual contributions to all pretax health flexible spending arrangements, also known as FSAs, which is $2.5K. Look for inflation to cause fluctuations there in the following years.
Additionally, the law specifically states that small-group health plans must provide rebates in the event that 80% of premiums aren’t spend on the medical care and improvements over administrative costs and profits. Redistribution, reallocation and readjustments -- that’s the name of the game with a lot of these factors.
Look, too, for certain tactics to make use of a lot of the legal provisions in the Act, such as splitting businesses, cutting hours and hiring subcontractors, all to allow for workforces to stay under 50. It may tough for those bigger businesses, though, with only the choice to pay the penalties over providing health coverage. Weigh your options carefully and definitely consult with your business lawyer about what might be the best way to go.
It’s a Changing Landscape
Above all else, though, regardless of whatever you take from all of this, you’re going to want to do one thing with your business -- change with the times. Don’t, and you’ll lose money, you’ll lose time, and you just might lose a lot of your employees.
Change can be scary. But at the end of that tunnel, you’ll find that everything will be just fine during Obamacare.
Matt Faustman is the CEO at UpCounsel. You can follow his business insights on Twitter at @upcounsel.
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