Small Business

How do the Affordable Care Act Pros and Cons Affect Small Businesses?

Updated on November 30, 2019


Have you ever wondered about how the Affordable Care Act (ACA) affects you as a small business owner? As its name may suggest, a key purpose of the Affordable Care Act (ACA, also known as Obamacare) is to make health insurance more affordable for all Americans. Let’s explore the pros and cons of the ACA, and see what ACA savings might apply to your small business.

Affordable Care Act pros and cons: the beginning

Knowing about the current health-care law as it stands might help you understand the Affordable Care Act pros and cons, and how to take advantage of ACA savings for small businesses. With that said, let’s briefly talk about the Affordable Care Act’s history and how you might benefit from the ACA savings meant for small businesses.

History of the ACA and ACA savings

To read about the comprehensive history of the Affordable Care Act pros and cons, see our “History and Timeline of the ACA”. Here, though, we will look specifically at some of the aspects of the ACA that have affected, and may still affect, small business owners. While there are both Affordable Care Act pros and cons for all sorts of people, this list aims to show you how small businesses can be affected by the ACA.

  • In 2010, President Obama signed The Patient Protection and Affordable Care Act into law, also known as the ACA or Obamacare. This piece of legislation reformed the way health care is handled in the United States.
  • This act established the Small Business Health Options Program (SHOP) for small businesses with 1-50 employees. This program aims to help small business owners provide dental and health coverage to their full-time employees.
  • In 2010, small-business tax credits became available, meaning ACA savings for certain small businesses. According to the IRS, if your business has fewer than 25 full-time employees, all having salaries less than $50,000, and you pay at least 50% of their insurance premiums, you may qualify for the small business health care tax credit.
  • As of 2017, the law states that companies cannot deny you coverage because of a pre-existing condition. So if you or someone planning on being covered under your group plan has such a condition, coverage still applies under ACA rules.
  • The “21st Century Cures Act” allows small business employers to use health reimbursement accounts (HRAs) to help employees get health insurance. This ACA savings opportunity could be a great option for employers who may not be able to sponsor a group health insurance plan. The money you put in this account may be tax-deductible as well.
  • The ACA has an employer’s shared responsibility provision, which means that employers with the equivalent of 50 full-time employees or more must offer minimum essential coverage or make an employer shared responsibility payment to the IRS. This does not apply to employers with fewer than the equivalent of 50 full-time employees.

Make sure you’re up-to-date on rules!

It’s important as a small business owner to be up-to-date with laws that might be beneficial to you. The ACA has many provisions that could affect your businesses, and the best way to benefit from changes is to understand them.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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