Tuesday, March 30, 2010

What Obama's Health Care means to Small Business

As of 2014, you will be required to have health insurance, or face a financial penalty if you elect not to purchase coverage. Once the law goes into effect, you will be able to purchase coverage through a state exchange. How much you may save would depend on how much you earn. Individuals who earn more than about $43,000/year will be required to pay the full premium cost ($15,000 and up per person), as would couples who earn more than about $58,000/year. People earning below those amounts would be eligible for federal subsidies on both their premiums and out-of-pocket costs.

Under 27 years old? The new law lets you still be covered as a dependent on your parents’ healthcare plan.

Worried about a pre-existing condition? Group health plans and insurers will no longer be permitted to exclude coverage for preexisting conditions or place lifetime limits on coverage. Lifetime limits are prohibited effective six months from yesterday (date of enactment). Additionally, preexisting conditions exclusions will be eliminated for dependent children within six months of enactment and must be completely eliminated by 2014.

Insurance companies will not be able to deny you coverage, nor will they be able to disavow covering you or your family for a preexisting condition.

I’m a small business owner with no employees.

Sole proprietors or small businesses without full-time employees fall under the “self-employed” categorization above. The same rules apply – you must have coverage or pay a penalty for opting to go without.

I own a small business, and I have employees.

Businesses with fewer than 25 employees that pay an average of no more than $40,000/year will get a tax credit – up to 35 percent of the company’s share of their total health care premium – if they offer health coverage to their workers.

Companies with 26-49 workers are unaffected – no additional tax credit, but no penalties for not offering coverage.

The biggest change is that employers with more than 50 full-time equivalents (FTE’s) will be considered large employers.

Large employers will have to make available to all employees a minimum level of coverage or pay a per-employee penalty. Employers will not be required to provide coverage for part-time employees, but be aware that these workers may be counted as partial employees for purposes of determining whether an employer has 50 employees. The bill is still unclear as to how employees will be counted and what formula will be used, but it looks likely the number to be counted will be a baseline of total hours worked by all employees. For that reason, keep accurate time records.
If you offer coverage but employees are forced to purchase insurance through the state-based exchanges because the coverage you offer is not affordable, then you must pay separate fees relating to insufficient coverage options. This “Pay or Play” provision goes live in 2014 upon the creation of the state-based exchanges.

Both small businesses and individuals will have the choice of buying health insurance through state-based exchanges. The exchanges are expected to offer easy-to-understand competitive benefits at affordable prices. Depending on income and other factors, some small businesses and individuals may be eligible to receive credits toward the purchase of insurance through the exchanges.

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