Tuesday, August 12, 2014

What the ACA Means for Small Business Owners

The Affordable Care Act is complicated for entrepreneurs and you may not know which regulations you need to pay attention to. It's time to start watching closely, if you haven't already. You may be asking yourself a lot of questions: Am I suddenly going to have to shell out a lot of money for my employees' health insurance? Will my premiums go up? Will I be able to afford it? How do I know whether I can use the healthcare marketplace and whether I'm eligible for subsidies as a sole entrepreneur?If you are a small business owner or self-employed, the Affordable Care Act probably has you scratching your head. In addition, the regulations keep changing and deadlines for some phases of the employer mandates have been pushed out even farther. With constantly moving targets it's no wonder you're confused.If you are a small business owner who has employees, the trigger isn't how much you make but how many employees you have. If you employ less than 50 people, you are not required to offer health insurance to your employees. Small business owners with 50-99 employees will be required to provide affordable health care to cover essential services, including many preventive care services. Affordability is a critical factor and you can be penalized if your plans aren't affordable for your employees.The date for this to go into effect has been moved to 2016, but now is the time to start tracking employees' hours. These numbers will be used to categorize companies later so you need to know who is full time (working at least 30 hours per week) and be able to support your data. If the coverage doesn't include essential services or is too expensive (more than 9.5% of household income) and an employee purchases health insurance on the exchange and gets subsidies, the employer will be penalized.Because health insurance providers are now required to provide essential care for many people who may have pre-existing conditions, premiums are going up. While the Obama administration hopes that having employers providing healthcare coverage will help to keep these costs reasonable, many insurance companies have already raised their rates. This has caused some small businesses to rush out and renew their plans early to avoid higher prices down the road. According to a study conducted by the National Federation of Independent Businesses (NFIB) Research Foundation, 66% of small businesses are cutting into their profit to pay for cost increases and 40% have deferred investments to cover the premiums. The projected increases may mean some small businesses will continue their employee plans only through 2014 and then drop them when it's time to renew and the costs are too high.

If you are self-employed and you are the only employee in your small business, you will need to have a pretty clear estimate of how much you earn to determine whether you are eligible for tax subsidies. If you purchase healthcare on the health exchange you will have to provide some estimate for your income. If you make more than 400% of the Federal Poverty Level (FPL) ($46,000 for an individual or $94,000 for a family of four) you will end up paying full price on the exchange. If your income and your business are stable this is simple enough, even if it's more than you want to pay.Does your income fluctuate? Some months you make more than others and you don't know how much you will make? You will need to estimate what you think you might make and then use that to determine whether you are eligible for subsidies. If you make less than the FPL, under $11,000, you should apply for Medicaid. There is good news for those who think they will be eligible for subsidies: If you end up not making enough to qualify for health insurance through the marketplace and should have been on Medicaid, you won't be penalized for getting subsidies. Unfortunately, the reverse is that if you make more than 400% of the FPL during the year, you will be required to pay the subsidies back.The Affordable Care Act requires that we reach deeper into our pockets to pay for our healthcare, both small businesses and individuals. Get smart about how you spend your healthcare dollars. Small businesses need to think long and hard about whether they want to foot the bill for their employees' health in coming years. If you have coverage through a small employer, enjoy it while you can, and start planning your healthcare budget for checkups and medical tests. If you are a small business owner, start planning for ACA changes so you are ready for stringent healthcare regulations and your business thrives in the long haul.

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