In coming months, there will be much discussion and misinformation about what the new healthcare insurance reforms commonly called Obamacare.
Known as the Patient Protection and Affordable Care Act, it is expected to have a major impact amg larger firms but little for smaller companies under 50 employees.
Small-business owner confidence continues to drag, according to the National Federation of Independent Business (NFIB) Small Business Optimism Index. The Index gained 0.9 points, rising to 88.9, failing to regain the losses caused by last month’s “fiscal cliff” scare. Expectations for improved business conditions increased by five points, but remain overwhelmingly low—negative 30 percent—the fourth lowest reading in survey history. Actual job creation and job creation plans improved nominally, but still not enough to keep up with population growth.
Interestingly, a study by the National Association of Woman Business Owners found that 73% thought Obamacare would have no effect on their efforts.
However, Sean O’Connor, Media Content Manager at GoHealth does offer the following points a small business or start-up should know.
- First off, it is important to understand what is considered to be a “small” business under the Affordable Care Act (ACA). The ACA defines a business as small if it employees fewer than 50 full-time equivalent workers.
- Small business owners are not required to make any changes at all. They are exempt from the employer mandated of the ACA. They are not subject to any tax penalties for not offering coverage to their workers.
- If a small business owner would like to offer health insurance coverage to workers, he or she certainly can. What’s their incentive for extending coverage? They may be able to take care of small business tax credits.
- Not all small business are eligible for these tax credits. The smallest of the small are really the ones that benefit. Here are the rules: The credits work on a sliding scale as long as the business has up to 25 employees with average wages below $50,000 a year.
- These small business tax credits are actually available now. The credit can be up to 35 percent for qualifying small businesses and up to 25 percent for non-profits. After 2014, the maximum credit goes up to 50 percent for small business employers and 35 percent for non-profit employers.
- Health insurance exchanges: In 2014, most businesses with less than 100 employees will be able to shop for health insurance through a health insurance exchange (online marketplace). This is a plus for businesses of this size because the exchanges will offer them rates that previously have only been available to very large companies with group plans.
There are some benefits O’Connor believes. He uses as an example a small business such as a technology startup.
“Maybe they have about 5 to 10 employees but are looking to grow. Health reform and the small business tax subsidies could prove to be a definite help,” he says.
“Even though they are small and just starting out, they may be able to offer benefits that rival those of more established, large competitors. This will give them more of an advantage than before as they attempt to attract the brightest, smartest talent to join their team."
What everyone should remember is that many of the pieces are still being finalized and small business leaders need to keep informed,” he adds.