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- Firms with 50 or more full-time equivalent employees must provide health insurance coverage
- Small Businesses with 49 or fewer full-time employees do not have to offer health insurance to employees
- Obamacare offers incentives for small businesses to cover employees
- Small business owners can participate in company plans
- The employer mandate and penalties do not apply to firms with 49 or fewer employees.
- SHOP program assists small businesses seeking to provide health insurance
Obamacare offers incentives and assistance to firms with 49 or fewer employees and tax credits to those with less than 25 employees. The Affordable Care Act does not require that they provide health insurance coverage. It encourages them to cover full and part-time employees. The Obamacare employer mandate is a time-phased approach to expanding insurance coverage for American workers. Larger firms, those with 100 or more full-time employees, must insure 70 percent of their workers by 2015 and 90 percent by 2016. Firms with more than fifty but less than 100 employees must offer insurance to full-time employees in the calendar year 2016. When considering employer plans, employees are like other consumers, they must find the best plan for their needs. Comparison shopping is an excellent way to find the right plan. Start comparing health insurance plans now by using our FREE tool above!
Full-Time Employee
The Obamacare regulations have defined full-time employee for the purpose of the employer mandate and incentives for firms with 49 or fewer employees. The term full-time equivalent has defined the full-time employee for Obamacare purposes. Firms that wished to avoid providing insurance for employees and the penalty for refusing to cover them have used the full-time employee provision to convert full-time workers to part-time workers.
This form of deliberate avoidance is not an action that promotes health and well-being in the valuable employee workforce, and it distorts the freedom granted to employers to organize their business affairs.
Employees can check to determine if an employer has properly classified their status. The following describe full-time equivalent employees
- Employees expected to work 30 or more hours per week are FTE.
- Employees that work 130 hours or more per month are FTE.
- Employees that work 30 hours per week for more than 120 days are FTE.
Affordable Coverage
The coverage provided by employers must be affordable in order to satisfy the employer mandate. For employees of firms with 49 or fewer employees, the coverage must be affordable and qualified. These employees are subject to the individual mandate until covered by an employer plan that costs less than 9.5 percent of annual income, and provides essential health benefits. If employer-provided coverage exceeds 9.5 percent of annual income, the employee can get a special enrollment period and qualify for plans through the Obamacare Marketplaces.
Tax Credits
The Obamacare offer of tax credits usable in years in which a business posts a profit is a great advantage for small businesses that offer health insurance. The maximum tax credit reaches up to fifty percent of the costs contributed by the employer. This credit applies even though the entire expense is normally tax deductible; one can accept credits and deduct the balance of expenses. It is an excellent way to improve the company bottom line while investing and protecting its important human resources.
The Health of Small Businesses
Statistics show that illness and disability contribute to small business failures. Many small businesses depend on the health of their owners and key employees to sustain fundamental business processes.
The loss of key employees due to illness or other severe events creates a vacuum of the lost person, the need to use other resources to replace them and the impairment of business function while the organization works through around the initial loss of key personnel.
Health is quite important to small businesses. Many illnesses are preventable with early detection and treatment of conditions that lead to severe health outcomes. Important to longevity, health is also important to productivity. The loss of person hours to preventable illness would also burden small business disproportionately when compared to larger firms. Health insurance is a valuable job benefit and it helps recruit and retain top talent.
Obamacare Improves Bargaining Power
By providing a mechanism through SHOP to pool the employees of many small companies into a larger group, insurers offer lower process. This expanded pool is similar to large groups sponsored by a big corporation; there is much greater bargaining power in large numbers. The SHOP marketplace magnifies bargaining power and produces lower prices for companies and employees that participate. The SHOP program will expand to firms with 100 or fewer FTE and provide broad pool benefits for plans, coverage, and premium prices.
Small Business Programs
Obamacare offers the business program called SHOP to promote health coverage among small businesses. The SHOP marketplace is part of each state-sponsored exchange and healthcare.gov. The support available includes selecting plans and planning benefits that can improve chances of a successful launch and high participation.
Tax credits
The greatest percentage of tax credit benefit goes to firms with ten or fewer employees that average $20,000 per year or less. These firms can qualify for up to fifty percent of amounts paid as the employer contribution to health insurance premiums. The tax credit goes to firms that either pay at least half of the total premium for their employees, or an amount equal to fifty percent of a benchmark premium plan. The benchmark premium plan is the second low priced Silver Plan in the respective state marketplace.
Small Business Owners
Before the Affordable Care Act, business owners were among these with high rates of uninsurance. Like many other Americans, owners of businesses with 25 or fewer employees had difficulty finding insurance and affordable coverage. When a business owner offers health insurance to employees, he or she may also purchase individual or family coverage. This is consistent with the purpose of the Affordable Care Act top promote health and increased productivity. The below-listed items describe some advantages of Small Business Health Plans under the Affordable Care Act.
- Plans can begin at any time of the year, not just during open enrollment
- Business owners get tax deductions for their contributions health insurance
- Businesses with 25 or fewer employees averaging $50,000 or less may qualify for tax credits
- Business owners can decide their level of contribution
- The maximum tax credit goes to firms with ten or fewer employees averaging $20,000 or less
Putting Essential Benefits to work for Small Business
The benefits to small businesses are the same vital considerations that form the core of the Affordable Care Act, namely, the essential health benefits that promote preventive medicine and wellness.
Making these benefits part of every small business plan provides important low or no cost benefits to covered employees.
They will no longer feel the economic pressure to forego basic medical care due to costs. The essential benefits come at no extra costs to employees. The benefits of annual physical exams and routine health screenings can provide an important health maintenance baseline.
Best Small Business Investment is its People
Many small businesses operate through the skills and knowledge of key employees. As a small business, the organization’s size magnifies the role of each employee. The technology of small companies often resides in its employee know-how, and to a greater extent than big companies, each employee has particular value for their contribution to the team success. Guarding the health and well-being of these vital human resources is in part the role of health insurance. Comparison shopping offers the best chance to get health insurance coverage that meets the needs of the individual or family. Compare health insurance rates now by entering your zip code in our FREE tool below!