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Obamacare: What Does It Mean for Your Company and Employees?

Pundits will keep arguing and talk show hosts will keep yelling, but, for now, Obamacare, officially known as the Affordable Care Act (“ACA”), is up and running and here to stay. The ACA created new rules, tax credits, and structures for small businesses and their employees, which are essential for a small business owner to understand.

One of the more controversial and well-known mandates of the ACA was the rule that businesses provide health coverage for their employees.  However, this requirement only exists for companies who have more than 50 employees. If you meet that threshold, you have to provide coverage. If you have fewer than 50 employees then you don’t have to worry about it for now (even though since all individuals are legally required to have insurance, it is an important factor for people looking for a new job).

If you want to provide insurance anyway, there are a number of things that have changed. Pricing for insurance is now regulated differently - meaning that insurers cannot consider the health status of workers when determining pricing and there are limits to how much insurers can increase rates based on age. All this means that if you looked at providing insurance before, and it was too expensive, rates may have changed, and are worth looking into - though depending on your company’s composition of employees, rates could be higher.

The ACA also created the small business tax credit for companies that choose to provide employees with health insurance. If you employ fewer than 25 people, depending on other criteria, the credit could cover up to 50% of your contribution toward employees' premium costs. The tax credit is highest for the smallest companies - the smaller the business, the bigger the credit. One of the requirements for eligibility is that you purchase insurance through the Pennsylvania Small Business Healthcare Option Program (“SHOP”) insurance exchange, which offers a number of different plans, at different levels of coverage. The idea behind the exchange is that small businesses can pool together and negotiate coverage as a group, hopefully using that bargaining power to get a better deal. As a business owner, it might be worthwhile to determine whether the marketplace is a good option for you and your business.

Even if you want to avoid Obamacare entirely and the size of your company allows you to do so, your business is still be required to inform its employees of their health care options under Obamacare.  The notification requirement applies to any business with at least one employee and $500,000 in annual revenue, so be careful to comply with the law or potentially face hefty fines.

If you would like to discuss any legal issues regarding your Montgomery County, Delaware County or Philadelphia County business, please contact Sallen Law, LLC.