We’re two days into individuals and businesses being able to purchase insurance through new state health insurance exchanges under the Affordable Care Act.
If you’re not familiar with the Affordable Care Act (or ACA; also known by it’s full name as the Patient Protection and Affordable Care Act and commonly referred to as “Obamacare”), it’s a federal statute that was signed into law. It became effective on March 23, 2010. The reason why it’s getting so much attention is that for individuals, the major provisions detailed in the law are required to be phased in by January 1, 2014. Also, October 1, 2013, was the first day that the Health Insurance Marketplace was open for business, enabling people to see if they are eligible for health insurance subsidies and to find insurance plans.
What does this mean for you as a small business owner and employer? Here are the top three things you need to know about it at a glance.
- You are not required to offer health coverage. That bears repeating: under Obamacare, small businesses are not required to offer health coverage. As a small business owner, if you would like to provide health coverage to your employees, or should you already offer coverage and want to compare, you can set up an account in the Small Business Health Options Program (SHOP) Marketplace. The requirement extends to all U.S. citizens and permanent residents but not to small businesses. For individuals, they must have health insurance by January 1, 2014. Additionally, for individuals, that plan needs to meet what’s known as the “Minimal Essential Coverage” requirement of the ACA. If you already offer insurance to your employees, here is what Minimal Essential Coverage translates to for them:
- Private insurance plans and employer-provided insurance plans (private insurance includes the one you provide as the employer, as well as retirement plans and continuation of medical coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA);
- Medicaid (which is for those families and individuals with low income and/or resources);
- Medicare (which is for those who are age 65 and older); and
- Plans obtained via the new Health Insurance Marketplace.
Note: Plans such as the Children’s Health Insurance Program (CHIP), TRICARE (which used to be known as the Civilian Health and Medical Program of the Uniformed Services or CHAMPUS), and other plans for veterans and Peace Corps members may be considered valid as Minimal Essential Coverage as well.
- You have health coverage rights. Starting next year, insurance providers can’t:
- Deny coverage if your employees or their dependents have pre-existing conditions;
- Raise your group plan’s premiums if you have employees who have high medical costs;
- Charge higher premiums for employees based on their gender (such as higher prices for female employees).
Note: This doesn’t affect those programs that are “grandfathered” (for employees that have been enrolled in a health insurance plan since March 23, 2010, you will have to check with your insurer to find out whether that plan is grandfathered and therefore exempt from the changes).
- You may qualify for tax credits. If you offer your employees health insurance coverage through SHOP, your small business may be eligible for tax credits. A small business health care tax credit is available for businesses that have less than 25 full-time employees and if those employees make an average of $50,000 or less per year. Effective 2014, the tax credit will be valued at up to half (50 percent) of your contribution to premium costs. For tax-exempt employers, this amount is up to 25 percent.
Note: This tax credit is only available to your business if you obtain coverage through SHOP.
If you have any questions about the SHOP Marketplace or the small business health care tax credit, you can contact them toll-free at 1-800-76-7893, Monday through Friday from 9:00 AM to 5:00 PM EST. Please note that with the current government shutdown, there may be delays.