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Decreasing the Cost of ACA for Small Businesses


Provisions within the Affordable Care Act (ACA) may help small businesses in the form of tax credits, lowering premium costs and increasing access to affordable health insurance. Although with the start of a new year, some benefits may change to benefit small businesses even more.

Small Business Tax Credits

Businesses that have less than 25 full-time equivalent employees, pay average annual wages below $50,000 and contribute 50% or more toward their employees’ individual health insurance premiums may qualify for a small business tax credit. Starting in 2014, the tax credit will increase from 35 percent to 50 percent to assist in the cost of health insurance and is available to small businesses who participate in the Small Business Health Options Program (SHOP). Also as of 2014, the SHOP Marketplace is open to employers with 50 or fewer full-time equivalent employees.  Starting in 2016, all SHOPs will be open to employers with up to 100 full-time equivalent employees.  If you are planning on using SHOP, you must offer coverage to all of your full-time employees. Enrollment to participate in SHOP started in October 1, 2013. Businesses can either enroll directly through SHOP or through an insurance broker such as ambishon financial.

Implement Workplace Wellness Programs

The ACA has an incentive to promote employer wellness programs in order to support a healthier work environment. Health-contingent wellness programs require individuals to meet a certain standard that is related to their health to obtain a reward such as employees who decrease their use of tobacco. As of January 1, 2014, the maximum reward to employers who use a health-contingent wellness program will increase from 20 percent to 30 percent of the cost of health coverage.  In addition, if the program is designed to prevent or reduce the use of tobacco, the reward can be up to 50 percent.  The proposed rules also include “participatory wellness programs” that are programs that reimburse for the cost of a fitness center membership or rewarding employees for attending a monthly, no-cost health education seminar.

Exempt from Employer Shared Responsibility Terms

Businesses with fewer than 50 full-time equivalent employees are generally not affected by the Employer Shared Responsibility rules. These small businesses do not have to pay an assessment if their full-time employees receive premium tax credits in the Marketplace. As of July 2013, a relief was issued to employers stating that no shared responsibility payments will apply until 2015. Businesses that do employ 50 or more full-time equivalent employees and do not offer affordable health insurance that provides minimum value to full-time employees and their dependents, may be required to pay an assessment if one of the said employees receives a premium tax credit to purchase coverage in the individual Marketplace. Remember, a full-time employee is considered to be an employee working an average of at least 30 hours per week.

If you are a small business and need more information about health coverage for your employees, contact ambishon financial today!