What the Health Care Law Means for Businesses
The Patient Protection and Affordable Care Act (PPACA), also known by some as Obamacare, is a federal statute dealing with health care that will have major implications for employers starting in 2014. PPACA is a huge deal; the government hasn’t overhauled the health care system to this extent since 1965. The most important thing that employers can do in anticipation of PPACA is to understand what their responsibilities will be under this new statute.
Small businesses that employ less than 50 people are exempt from employer responsibility requirements, which means that they will not be required to provide health insurance to their employees. These businesses account for nearly 96 percent of all businesses in the country. Businesses that employ more than 50 people, however, will be required to provide health insurance to their employees. These types of businesses only account for around four percent of all businesses in the country, and the great majority of businesses that employ more than 50 people already offer health insurance. If an employer of over 50 people chooses not to offer health insurance, then they will be required to pay an annual $2,000 fine per employee. However, the hope is that through the changes PPACA will enact, more businesses will willingly offer coverage due to increased choices and lower premiums.
Small businesses that want to offer coverage to their employees often find it difficult to do so due to premiums that are higher than those paid by large businesses. In an attempt to combat this, in 2014, PPACA will allow businesses with up to 100 employees to purchase health insurance through Small Business Health Options Program (SHOP) Exchanges. This way, small businesses can increase their purchasing power and ask for the better premiums. In 2017, businesses with over 100 employees will be allowed to purchase coverage through SHOP Exchanges as well.
PPACA will also offer certain businesses tax credits. For example, if businesses that employ less than 25 full-time employees who make less than $50,000 a year purchase health insurance for said employees, they will be eligible for tax credits. Certain employers may also be eligible for tax credits covering up to 35 percent of their contributions towards employees’ premiums.