Healthcare Reform

ACA: The ABC’s for Small and Medium Employers

Even with health care reform, there is still NO federal (or state) law that requires businesses of any size, large or small, to offer insurance.

Ultimately, The Affordable Care Act (also known as PPACA or Obamacare) is supposed to provide you with more choices in regards to providing insurance to your employees. In a sense, you now have three strategies to take, for your company:

  1. Choose not to provide a company policy, and let your employees get their own insurance through the individual marketplace.
  2. Use The Small Business Health Option Program (SHOP) to obtain a group plan.
  3. Use a trusted advisor, such as a Professional Employer Organization (PEO) or an insurance agent, to obtain a group health plan.

Your decision to one of the above will affect your business depending on the number of employees you have.

Under 50 employees

You are not required to offer health insurance and you face no penalties if you don’t. If you do wish to make health coverage available to your employees, you can use the SHOP or turn to a trusted advisor to help you obtain and administer a plan.

What to consider: Not providing coverage (since there is no penalty) may seem like a good approach for the company since individuals can now go to the Marketplace and obtain coverage.  However, providing a plan can help make you a desirable employer (because employees don’t have to seek out coverage on their own), and provides your employees the opportunity to pay for their contribution to the plan through pre-tax payroll deductions.

If you have 50 or more employees

Starting in 2015, if you have 50 or more full-time equivalent employees and do not provide your employees “accessible” health insurance, you will have to pay a penalty ($2000 per year, per employee) if any of your full-time employees get help paying their premiums through the marketplace.

If you should offer coverage, that plan must then be “affordable” to avoid a penalty. This penalty is $3000 per year for each employee whose contribution to their premium (employee only, not dependent coverage) exceeds more than 9.5% of their household income.

Remember, while your contributions to the plan may be tax deductible – the penalties are NOT.

What’s your strategy?

Health care reform is confusing and frustrating, and because every company is different, no one solution isn’t best for everyone. As an Illinois based PEO, MidwestHR is here to help! Please contact our office at (630) 836-3000 to speak to a team member on how working with MidwestHR can help you navigate the complexities of compliance of ACA.  In addition, please click here to download a PDF that outlines additional aspects and intricacies of the ACA, and how they might apply to your business.