Affordable Care Act small business terms

by Kelly Corbett
Wednesday, June 12, 2013

The Affordable Care Act was signed into law March 23, 2010, but key components to the act will be effective in the coming year.

A six-month open enrollment period for the health insurance marketplace, open to individuals and small business owners with fewer than 100 employees, begins Oct. 1, 2013.

On average, small businesses pay about 18 percent more than large firms for the same health insurance policies, states, a federal government website managed by the United States Department of Health and Human Services.

Beginning in 2014, businesses with 50 or more full-time equivalent employees will be penalized for failing to provide coverage for employees who work an average of 30 or more hours per week. The penalty is $2,000 for each full-time employee over a 30 full-time employee mark.

Adam Shay, a Wilmington certified public accountant, said many small businesses are too small to be penalized.

“A lot of times what I see with smaller businesses, they either have full-time employees and they may offer them some sort of reimbursement for health insurance or they may have part-time employees and not offer anything,” he said.

Shay said he is encouraging business owners to become knowledgeable about the act to be more competitive in the market to retain and recruit employees better.

“Businesses that kind of understand what’s coming at them will be able to better educate their employees and hopefully prevent employees from trying to work elsewhere that just covers health insurance,” he said. “I think there’s just fear in the unknown. … I think the biggest fear that people have is that either at the business-level or the individual level is that it’s going to result in increased costs or substantially increased costs.”

A small business tax credit, up to 35 percent for businesses and 25 percent for nonprofits, is available to companies with fewer than 25 employees with average wages below $50,000. The tax credits will rise to 50 percent in 2014.

Adam Linker, policy analyst at the North Carolina Justice Center’s health access coalition, said the center conducted an actuarial analysis and talked to several small business owners around the state about the ACA.

“There was an estimate that the number of businesses offering insurance would increase starting in 2014,” Linker said. “You’re going to have some people dropping coverage and some people offering. So at the end of the day, there’s an increase but it’s not a big increase. In fact, the major change in health reform is people who are uninsured or buying on the individual market.”

“I think it would have a big impact on the way people think about their employment. There are just a really large number of people, for example, who can’t start a business. They need the benefits they have at their current job, so they’re really locked into their current employment. … I think this will give people new flexibility to start new businesses or to work at a startup company,” Linker added.

Once health reform is implemented, Linker said the number of businesses offering healthcare and the number of people receiving Medicare remain fairly stable.

There are going to be two exchanges, he said, with one focusing on providing benefits to small businesses.

I think in the second and third years, we will see even more benefits and even more of the exchange taking the administrative burden of health insurance off of small businesses,” Linker said. “Really I would think of it as a two to three year process of making health insurance work for small businesses. We may not see all of the benefits in the first year, although the first year benefits will be substantial.”


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