For small business owners, navigating through health benefit options can be intimidating. The new health reform regulations make understanding health benefits options even harder.
Which provider do I choose, what will it cost my business, will it affectively assist my employees, what customizations should be offered, and am I staying compliant with the ever-evolving health reform changes?
These are all common concerns among small business owners. However, health insurance doesn’t have to be so complicated.
Here’s eight quick tips, options, and resources for small businesses for making a good decision about employee health benefits.
1. Health Reform's Employer Mandate Does Not Apply to Small Businesses
The Affordable Care Act (aka health reform) has far less impact on smaller businesses than it does larger businesses.
If a small business has less than 50 FTE’s (see this worksheet on calculating FTEs) then there's no penalty for not offering traditional health insurance to their employees.
2. While Small Businesses are Not Required to Offer Health Insurance, it Certainly Helps
Health benefits have been, and will continue to be, a major focus for recruitment efforts in 2014. When it comes to the recruitment and retention of employees, health benefits are often a deciding factor. In addition, a healthier workforce generally means a more productive workforce.
3. New Taxes and Fees are Increasing the Cost of Small Group Health Plans due to ACA
Patient-Centered Outcomes Research Institute (PCORI) Fees, Insurer Fees, Transitional Reinsurance Fees, and Risk Adjustment Fees, on average, are all assisting in the increase in costs related to small group health plans.
4. A Couple of New Options for Small Business Health Insurance Do Exist in 2014
There are a couple of new health insurance options small business owners are considering for 2014: defined contribution health plans and the SHOP Marketplace.
Defined Contribution Health Plan
Small businesses give its employees a health care allowance instead of purchasing group health insurance.
Employees can then use their healthcare allowance to purchase a health plan of their choice on the Marketplace (e.g. healthcare.gov), and those eligible can access the health insurance subsidies.
SHOP Marketplace (a small group health plan)
Small businesses with less than 50 employees purchase a group health insurance plan through an agent or broker.
If the small business meets the requirement for the Small Business Health Care Tax Credit, it can claim a tax credit, come tax season.
5. There is an “Individual Mandate” for Employees
Under health reform, employees must enroll in health insurance in 2014 or else come tax season, in most cases, the employee will pay a fee.
6. New Ways for Employees to Purchase Health Insurance Do Exist
Eligible workers who are not offered health insurance through their employer will be able to purchase insurance on a healthcare exchange, commonly referred to as the Marketplace. By using this Marketplace, and being eligible based on annual income, these employees may be eligible to receive tax subsidies. Try this Health Subsidy Calculator to see who applies.
7. There are New Health Benefits Reporting Requirements for Small Businesses
Although many small business will be deemed exempt from the ACA employer mandate, there are still reporting requirements that MAY apply.
New W-2 Reporting
PCORI/CER Plan Fees
High-Earner Medicare Payroll Taxes
8. Experts Predict a Premium-Related Increase of 65% of Small Businesses
The Centers for Medicare & Medicaid Services predict an increase in health insurance premiums for around 11 million small business employees, as a result of the Affordable Care Act. For an in-depth look, click here.
What quick tips do you have for small businesses about health reform and health insurance? Leave a comment below.