What's considered a small business under the Health Reform Law?
The Affordable Care Act defines a small business as one with less than 50 full-time equivalent employees.
What's a full-time equivalent employee?
Generally speaking, it's a true employee of your business who works 30 or more hours per week for 120 days or more per year. Employees who work part-time can partially count toward your total number of FTEs for your business even though you do not have to offer a part-time employee benefits.
Are small businesses required to offer health insurance to employees?
No, they are not required. So if your business has less than 50 FTEs, there is no penalty if you do not offer health insurance. Penalties are applied to large businesses starting in 2015.
Small Business Tax Credit
Some small businesses might qualify for a small business tax credit if purchasing a business health plan through the public exchange SHOP.
Offering Small Business Health Insurance
If a small business offers group insurance, they will still be required to meet:
- Participation (required number of employees on the group plan)
- Contribution (amount employer pays toward employee's insurance)
- Employee notification requirement (new under the Affordable Care Act)
- COBRA (if applicable) rules.
An Alternative to Group Insurance
Many small businesses might choose to offer individual insurance plans to employees instead of a business plan. If so, you can use the private exchange to enroll in coverage. No health insurance company can turn anyone away or charge more for pre-existing conditions, health history, claims, gender or profession starting in January 1, 2014.
Contact an exchange expert for more information on what option saves your business the most money.
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