In March, 2010, President Obama signed The Affordable Care Act. This act of Congress, often referred to as “Obama Care,” included penalties for businesses that do not provide health insurance to employees. These new penalties begin to take affect in 2014. Do you know how these new rules and penalties will affect your business?
The Affordable Care Act does not require businesses to provide health insurance to its employees. Instead, the act merely created penalties for businesses that do not provide health insurance. Not all businesses are subject to the act’s penalties. Certain small businesses will be exempt from the penalties. The threshold set by the Affordable Care Act, before a business is potentially subject to penalties for failure to provide insurance to its employees, is businesses with 50 full-time equivalent employees. Hours worked by part time employees are combined and then dived by the hours that would be worked by a fulltime employee to determine the number of full-time equivalent employees. An employer which has 50 or more full-time equivalent employees and does not provide health insurance to all of its full-time employees may be subject to a penalty of $2,000 per full-time employee. This penalty will apply to all full-time employees, even those that do receive health insurance through the employer.
On a brighter note, certain small businesses may also be eligible for tax credits that help the small business pay for health insurance for its employees. Beginning in 2014, small businesses may also be eligible to obtain insurance for its employees through insurance exchanges, mandated by the Affordable Care Act, which in theory will allow small businesses to obtain more affordable health coverage for its employees. Navigating the changing landscape of health insurance can be daunting for businesses owners and operators. The trusted tax attorneys of Dana Law firm can assist you and your business in evaluating your options to determine the best path forward in the new world created by the Affordable Care Act.