A new report in the Los Angeles Times is triggering new buzz and controversy around the new provisions and choices small businesses are faced with under the ACA. The report documents more than a dozen restaurants in the L.A. area implementing an “Obamacare surcharge” on to customers bills in hopes of being able to provide a justified benefit to their employees. While many might not agree with the new surcharge for whatever reason, the reality is that Obamacare does not require small businesses to offer health insurance to their employees.
If Obamacare does not require small employers provide health insurance, what is the primary reason small businesses offer health insurance to employees?
In July of 2014, eHealth surveyed 60 of our small business customers via email and found that most have no plans to stop offering coverage to employees.
- In fact- forty-four percent (44%) feel morally obliged to offer health insurance to employees.
- Thirty-one percent (31%) feel that offering coverage helps them hire and retain the best workers.
- The report also found that a majority of small employers (70%) believe it’s possible their employees would look for work elsewhere if they stopped providing health insurance. (Would you??)
So what did Obamacare change for small employers?
Although health insurance for small business isn’t required under Obamacare, small business employers may receive tax credits when they provide health coverage as follows:
- Employers with 25 or fewer employees with average annual wages of less than $50,000 may be eligible for a special tax credit of up to 35% of the amount the employer contributes (at least 50%) toward employee insurance premiums.
- In 2014, that tax credit increases to 50% for employers who pay at least 50% of their employees’ monthly health insurance premiums.
For more information on small businesses and Obamacare visit our resource center.
If small businesses do not offer health insurance where can their employees get health insurance?
Whether or not they offer health insurance to their employees, it is absolutely critical for small businesses to make their employees aware of their obligation to seek health coverage under the Affordable Care Act. Employees must be made to understand that they have access to guaranteed coverage in the individual market. Small companies that do offer health insurance must also explain to their employees that they may be eligible for government subsidies if the coverage provided by the company is not deemed to be affordable under the law.
What are government subsidies?
Subsidies may be available to you if your income falls below 400% of the federal poverty line (FPL).
- Subsidies are based on your estimated income for the year, not on your past income. So, when applying for a subsidy, estimate your annual income as accurately as you can, but remember that changes to your income during the year may alter your eligibility for a subsidy.
- If you qualify for one, a government subsidy can have a significant financial benefit. According to a recent eHealth study, individuals who purchased a non-subsidized health insurance plan through eHealth paid an average premium of $271 per month ($3,252 per year) more than consumers receiving government subsidies.
- On average, consumers would need to pay an extra $189 per month for their health insurance if they lost their subsidy.
Learn more about subsidies here.
What you should keep in mind:
As you can see, there are a lot of parts to the Affordable Care Act. While some small businesses are looking to help their employees get covered, others are faced with having to lay off workers to be under the 50 employee limit because they can’t afford to give their employees the option of employer coverage. Keep in mind that everyone is going to react and adapt to the new law differently. Also, don’t be afraid to look at all your options in the marketplace, such as the government exchange or private exchanges like eHealth.
