Affordable Business Healthcare

Facts about Affordable Business Healthcare

Obamacare impacts individuals and businesses. The latter also get tax benefits which make affordable business healthcare a good option for companies that take it. The ACA- Affordable Care Act offers incentives, including tax breaks & tax credits via the SHOP-Small Business Health Options Program, to small businesses that have less than 25 full-time-workers, who are making less than $50,000 as average annual wages. This helps the companies provide Affordable Business Healthcare benefits to their employees.

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The Requirement

While most employers & employees won’t really pay additional taxes under the Affordable Care Act, there is a rise to the existing Medicare part-A tax for small businesses & employees that are making more than $200,000. The other requirement is that starting in 2015 / 2016, employers that have 50 full-time-equivalent employees/ more have to offer Affordable Business Healthcare to the full-time workers or will have to pay a penalty.

Affordable Business Healthcare is a Win-Win

The ACA mandates the responsibility and the cost of insuring full-time employees to a larger small business that has 50/more full-time equivalent employees. It also provides generous tax credits to the smaller businesses that have 25/less full-time-equivalent employees. In effect, small business owners as well as employees benefits under the Affordable Business Healthcare law. Here are some additional facts:

  • The online function of the SHOP was launched on 15 Nov 2014
  • Small businesses are able to apply for SHOP plans & tax credits using paper applications
  • Affordable Business Healthcare tax benefits & tax credits are based on the number of FTE employees & the average annual wages, not only on the actual number of the full-time employees
  • Tax credits are all retroactive since 2010 and businesses can still claim their health insurance tax-credit for any year starting from 2010
  • Starting 2016 any employers that have 50-99 full-time-equivalent employees are required to insure that workforce too
  • For employers that have 50/more FTE, who do not provide this coverage, the fee is $2,000/ FTE (minus the first 30 FTEs)
  • For employers that have 50/ more FTE, who provide coverage, but the coverage doesn’t provide the minimum value/isn’t affordable, the fee is then the lesser of $3,000/full-time employee that receives subsidy or $2,000 per FTE (minus the first 30)
  • Transition relief is also available to large and small businesses that are transitioning into compliance with this new mandate
  • Businesses that make above $250,000 in profit are required to pay 9% more on the existing Medicare part-A tax. This tax is also split (.45% each) between the business employer & employees that make more than $200,000 individual (& $250,000 family)
  • All businesses with more than 50 full-time-equivalent employees are required to keep their employees informed about their Health Insurance Marketplace /exchange in the state

As you can see there are a number of terms and conditions related to Affordable Business Healthcare, that small businesses and the employees working there should be aware of. Since there are also certain updates and changes that keep coming in, it is crucial for business owners to check which tax rules apply to their specific businesses.

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