Here’s what small business owners should know about the health insurance requirements under Obamacare.
Does the Affordable Care Act (the law commonly known as “Obamacare”) require small business owners to provide health insurance to employees? Are there other requirements that small businesses should know about before they purchase health insurance coverage? In this article we’ll examine these questions and help you understand your options when it comes to providing health insurance to your workers.
Health insurance requirements under the Obamacare law
If you’re a small business owner and worried that the Obamacare law requires you to provide coverage for your employees, the good news is that the requirement may not apply to you. In general, only businesses with 50 or more full-time workers (or the equivalent in part-time workers) are required to provide group health insurance coverage or face tax penalties. Most small businesses have far fewer than 50 full-time workers and so are exempt from the provision of the law mandating employer-sponsored coverage.
That said, small business owners and their employees are generally required on an individual basis to have health insurance coverage that meets the requirements of the Affordable Care Act. This typically means that they must either buy coverage on their own in the individual and family health insurance market, or else purchase or enroll in small business group health insurance to meet their requirements under the law. Going without health insurance entirely can leave you open to possible tax penalties.
Other health insurance requirements for small business owners
Small business owners who do opt to purchase group health insurance coverage should know that some state and federal rules and requirements may apply. For example, when you purchase a group health insurance plan you are generally required to pay at least 50% of the monthly health insurance premiums for your employees. You’re also typically required to allow employees to cover their dependent children until age 26, even if they no longer live at home.
You are generally not required to purchase dental or vision coverage along with a health insurance plan. You are also generally not required to pay toward the monthly health insurance premiums of your employees’ dependents, though rules may vary from one state to another.
Special opportunities for employers offering group health insurance
Though they’re not required to provide group health insurance coverage under the Affordable Care Act, many small businesses choose to provide group coverage anyway. Some consider it their responsibility as employers to offer coverage, and many believe that offering health insurance helps them hire and retain the best workers.
When you do offer group health insurance to your employees, you are generally able to deduct the amount of money you pay toward their coverage from your business taxes. If you purchase your group health insurance plan through a government-run SHOP exchange (where available), you may qualify for special federal tax breaks. State-based tax breaks may also apply. To learn more about how offering health insurance coverage can affect your taxes, contact a licensed financial expert or accountant.
Small business owners who are interested in learning more about the group health insurance options in their area should work with a licensed online health insurance agent or private exchange. Through a licensed agent you can get a broad view of the coverage options available to you. You can also get personal help and advice. Once you’ve purchased a group health insurance plan, a licensed agent can also help you enroll your employees and their dependents during your annual open enrollment period.