You won't have to worry about the most significant one until 2015.
When the Affordable Health Care Act became law in 2010, its impact was wisely spread out over several years. As an individual and a business, you've likely already been affected by some of the changes already enacted.
The big one that will affect you, however, has been delayed until 2015: the employer mandate. Initially slated to go into effect in 2014, it will require businesses with more than 50 employees to provide health coverage for all employees. Those that don't face an estimated $2-3,000 penalty per employee every year.
Changes wrought by the Affordable Health Care Act that will occur in 2014 are not carved in stone. Changes can still occur, like the delaying of the employer mandate did. But here's a look at some of what is being projected for 2014.
Exchanges and Tax Credits
According to the White House, small businesses now pay premiums that are 18 percent higher than those paid by larger companies. They also tend to incur higher administrative costs and don't have the bargaining power that big business does.
Beginning in 2014, small businesses will be able to take advantage of the state-based Small Business Health Options Program (SHOP) "Exchanges" if they have fewer than 100 employees, rather than buying directly from health care insurers. In theory, this is supposed to make care more affordable because they will operate under the "pool" concept, where costs are spread among everyone in the group. But that remains to be seen.
For the 2013 tax year, small businesses with fewer than 25 full-time employees who make less than $50,000/year, and who contribute 50 percent to their employees' premiums, will receive a 35 percent tax credit. Tax-exempt small businesses that meet the same criteria will be able to receive a tax credit of up to 25 percent of their contribution. This tax credit is expected to change in 2014 to 50 percent and 35 percent respectively.
As with all IRS rules, the requirements can be complex, and there are exceptions. You may need help from us determining your eligibility for the tax credit.
If you're currently providing health coverage for your employees, you can continue to do so using the same insurer - as long as you don't reduce coverage or increase costs significantly.
Plan for Change
Health insurance exchanges are expected to open up for business October 1, 2013, with actual coverage beginning January 1, 2014. But if you're going to be shopping for insurance plans for your employees, or you just want to see what options are available, you can start preparing now. Visit the small business informational website provided by HealthCare.gov. By answering a few questions, you can find out what you need to know about how your company will be affected.
Not currently offering health insurance to your employees but think you'll be required to? Even though the employer mandate won't kick in until 2015, you should probably start doing some financial projections now to see how this new expense will fit into your existing business plan. Call us soon and we can help you with these, so that 2015 will be a year that makes your employees happier but doesn't strain your budget.