ACA Impact on Small Business

ACA Impact on Small Business

Small businesses with less than 50 employees can offer health insurance to their employees. There are numerous tax benefits to offering this option, but you must follow the guidelines that are laid down by the ACA. It’s these guidelines that dictate the ACA impact on small business.

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Offering health insurance isn’t mandatory for businesses with under 50 full time employees. But if you offer it to them, you can’t just pick and choose any insurance. It should be as comprehensive as mandated by the ACA. So if you choose to offer insurance, what would you need to do?

Reporting

You need to report some information about the healthcare marketplace to your employees. This includes information about the marketplace itself, healthcare plans that would fit the employee’s income, and if they would lose employer contribution if they purchase healthcare from the marketplace. While there are no penalties for not reporting this information to the employees, you’re advised to do so.

Waiting Period

If you do chose to offer health insurance to your employees, you need to offer it to all eligible employees, current and future. This means that if you hire a new employee, you need to offer them health insurance within 90 days of their employment date. This is the most significant ACA impact on small business. As your company grows and the number of employees increase, the number of insured would also increase.

Summary of Benefits and Coverage

All employers are required to provide this summary to their employees. This contains all the information about the health insurance plan, including what it covers and how much it would cost. This allows the employees to better understand the health insurance and its coverage. The information would allow them to choose a package that would best suit their needs.

Tax Benefit

As we mentioned before, small business are eligible to certain tax benefits if they offer health insurance in some shape or form to their employees. The Small Business Tax Credit is usually targeted at businesses with low to moderate income employees. If your business has fewer than 25 employees, contributes at least 50% to the health insurance, and pays annual wages below $50,000, you will get this tax benefit. This is a beneficial ACA impact on small business.

Medical Loss Ratio Rebates

According to ACA, health insurance companies need to pay at least 80% of the premium money to medical care. If they don’t, they need to provide rebates to policy holders. This means that if the insurance company hasn’t paid 80% of the premium income towards medical expenses, the employers get rebates. That amount needs to be distributed responsibly amongst the employees.

Wellness programs

ACA promotes employer sanctioned or introduced wellness programs for healthier work places. The rewards are decided on the basis on just how much it benefits the healthcare coverage. If your employees’ health has increased from 20% to 30% of the healthcare coverage, rewards will be awarded to the employer.

The maximum reward is offered on prevention or reduction in the use of tobacco, which is 50%. A combination of incentives and procedures ensures that the ACA impact on small business is significant.

Content by Webvisable

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