It should come as no surprise that decent health care benefits top the list as a priority for current job seekers. According to an article on Fastcompany.com:
“Just over three-quarters of U.S. workers prefer great health care packages over schedule flexibility and remote working, parental leave, free food, onsite daycare, or gym memberships.
In the realm of small business, understanding the requirements and options for providing health insurance to your employees can be overwhelming. With the uncertainty surrounding health care reform, it is increasingly imperative for small business owners to be aware of the implications this may have on their organization.
What is ACA?
The Affordable Care Act (ACA) is a healthcare reform law, enacted under former President Obama, that aims to make affordable healthcare available to more people. Health insurance plans are offered on The Marketplace, an exchange website operated by the federal government. The open enrollment period for health insurance begins November 1st and ends on December 15th.
The ACA requires that all individuals be covered by a health insurance plan, but it also allows the option to opt-out and pay a penalty for choosing to be uninsured.
How does this pertain to small business owners?
As mandated by the ACA, employers with 1-50 full-time employees (FTE’s) are considered small businesses and subject to certain rules and provisions.
- Exempt from Providing Health Coverage: Small businesses with between 1 – 50 employees are not required to provide workers with health care coverage. These businesses may, however, elect to provide health care plans purchased through the private market or through the Small Business Health Options Program (SHOP). This tool was established to provide direction to small businesses regarding health and dental coverage options for their employees.
- Exempt from Penalties: Businesses with fewer than 50 employees are exempt from penalties from the IRS that larger organizations are subject to for failure to comply.
- Small Business Tax Credit: For small businesses that opt to provide health care coverage, there may be tax credits to help mitigate the costs to employers. According to Healthcare.gov, “small businesses with less than 25 employees, [who] pay an average annual salary below $50,000, and contribute 50% or more toward employees’ health premiums may qualify for a small business tax credit.”
- Mandated Reporting: Based on whether or not your company chooses to provide health care coverage, you may be subject to certain mandatory reporting under the ACA. This could include withholding and reporting a certain percentage of wages, reporting the value of the provided health insurance coverage, and filing an annual report. For more information, visit this link.
It’s important to note that it’s advisable to be diligent in your understanding of what qualifies as a full-time employee under the ACA. The definition provided is someone who works either:
- A minimum of 30 hours per week,
- 130 hours per month, or
- A total of 1,560 hours in a year
Potential Changes to the ACA
For obvious reasons, the issue of health care is a controversial topic in the political arena. The current administration has made continued plans and efforts to repeal and replace the Affordable Care Act, though they have been unsuccessful. If this action is successful in the future, there will be initial and residual impacts felt by small business owners and their employees.
While much of the potential changes are speculative, they could include:
- A decrease in the quality of health care plans based on stripping out the requirement for essential standard benefits and preventative care
- No longer requiring companies with 50 or more employees to offer their employee’s health care coverage and removing the tax penalty
- More difficulty for individuals with pre-existing conditions to obtain coverage
- Health care costs could potentially be reduced for businesses with healthier employees
- More reliance on Health Reimbursement Arrangements (HRAs) for businesses with 50 or more employees
Current State of the ACA
Even though recent attempts to modify the ACA have failed, there have been changes made in the health care sector that will continue to have a ripple effect on individuals and small businesses.
This includes cuts to The Marketplace advertising budget. After a 90 million dollar cut, critical advertisement of the open enrollment period will be drastically less visible. This budget slash also means that assistance with enrollment will be harder to come by, as there are far fewer “navigators” in The Marketplace that are designated to help with the process.
Shopping for Health Care Coverage for a Small Business
For those small business owners who opt to provide health care coverage to their employees, the Small Business Health Options Program (SHOP) is an excellent resource to begin comparing plans offered by The Marketplace.
The website offers tools to help count your FTE’s, assess if your business qualifies for a tax credit, and helps connect you to insurance brokers and agents in your area.
Planning ahead during this open enrollment period can help alleviate the stress that many small business owners encounter when they research their employee health coverage options. Finding the right plan for your business is crucial and the following tips can help this process transition more smoothly:
- Determine if your company is eligible for SHOP plans by using this online tool.
- Consider using an insurance broker to compare private market plans to those offered in The Marketplace.
- Effectively and proactively communicate the plans, benefits, and enrollment process to your employees.
- Note that the open enrollment period is shorter than in previous years with a deadline of December 15th. If you don’t’ enroll by this deadline, you will not be eligible for 2018 coverage unless you qualify for a Special Enrollment Period.
Moving Forward
When it comes to the many vital decisions that small business owners are faced with, determining what kind of benefits package to offer employees is one of most important. This choice can not only make a difference to your bottom line but also to your overall employee satisfaction and retention. This process requires care and a thorough examination of your company’s unique needs.
By dedicating time to proper research and reaching out for professional advice, the health care coverage decision for your successful small business can be made far less complicated.