You own a small business. Under the Affordable Care Act (ACA), do you have to provide health insurance for your workers? According to eHealth’s Fall 2012 Small Employer Benefits Survey, two-thirds of you really don’t know. The answer, of course, is that it depends.
Groan. (I know. Sorry.)
The law is complicated. At 2,409 pages, how could it not be? But here’s what it says about which businesses should provide coverage for their employees:
- For businesses with less than 50 full-time equivalent (FTE) employees, offering health insurance to employees is optional—there are no penalties.
- Companies with 50 or more FTE employees may be penalized if they do not offer coverage or if they offer coverage that doesn’t meet the ACA’s requirements.
So if you’re a small business with less than 50 FTE workers, you can do as you please. There are no taxes or penalties. There are tax credits available (see WPS’ informative brochure) if you want to offer health insurance to your employees and you purchase that coverage for them through the exchange in 2014. Alternatively, you could also have them buy their own individual insurance off your state’s health insurance exchange in 2014 (they might be eligible for a premium subsidy, depending on their income). The main point here is that you are not required to do anything—you have choices.
If your business has 50 or more FTE employees, it gets more complicated. At that size—even if you consider your business small—your business is considered a large employer under the ACA. And if you don’t offer health insurance, you might get penalized. There are certain requirements that have to be met before your large business is penalized, which I won’t go into in this post. Let’s stick to small businesses for now.
If you’d like to hear about how the penalties work, add a comment below. If there are other aspects of the ACA you’d like to learn more about, you can comment on that, too.
For more information on how the ACA affects small businesses, take a look at our brochure, 7 Things Small Businesses Need To Know About Health Care Reform. It offers a more in-depth look at some issues small business owners should consider.