The Affordable Care Act continues to change and evolve, and small business owners are wondering “how does it affect me?” From the help of three senior managers at Washington Council Ernst & Young, we will discover the answers to the most common questions small business owners are asking.
How do I know if I have to offer health insurance?
What indicates whether or not you have to offer health insurance to your employees is the number of full-time equivalent employees the company has. Full-Time Equivalent (FTE) employees are determined by the following:
“Employer’s will be asked to add up the number of hours worked by their part-time employees in order to determine, in aggregate, how many full time equivalent workers, or FTES they represent. If the total number of full time workers (30 hours per week), plus full time equivalents exceeds 100, an employer is considered a large employer under the ACA for 2015. Typically, the hours worked by two or more part-time workers could add up to one FTE. If you operate more than one location, you’ll also need to consider your entire labor force while doing this calculation. To make it easy to determine how many full time equivalent employees you have, you can visit the FTE calculator for help.”
If you have fewer than 100 full-time equivalent employees, “you don’t have to offer insurance in 2015,” Meade says. If you employ 50-99 full-time people however, there is a new adjustment in Tax Year 2015 – as a business owner you must submit information on your employees to the IRS in 2016, verifying whether they and their family were offered health insurance by your company.
Where can I learn about plans available to my small business?
If your business has 50 full-time equivalent employees or less and you want to offer your employees health insurance, a good place to start is by visiting Small Business Health Options Programs (SHOP) site. Employers can use the SHOP Marketplace to get lower costs on group plans and claim tax credits.
What about tax credit?
Taxes and tax credits are based off of the number of FTEs and their average annual wages. Small businesses with fewer than 25 full-time equivalent employees, with average annual wages below $50,000, can get tax credits to help pay for employee premiums. The tax credits are retroactive since 2010 so you can still claim your health insurance tax credit for any year since 2010. You will need to file Form 8941 to claim your Tax Credit.
Is there a way for me to give my employees some different options for health coverage?
There is a new program taking shape called Employee Choice, where your employees could choose their own plan from whichever tier you select. Employee Choice is currently only in 14 states where the federal government helps run the SHOP exchange, but is scheduled to be available nationwide in 2016.
My business is growing. Fast. And we are hiring like crazy. What happens if I realize at the end of the year that we have more than 100 FTEs?
The ACA provides for a special transition period for employers that encounter this situation. Businesses generally have until April 1st of the following year to begin offering a plan before facing penalties if you haven’t previously offered coverage.
Once the business reaches over 50 full-time equivalent employees, it is required to let the employees know about the State’s Health Insurance Marketplace.
What happens if I don’t offer a health insurance plan?
The Employer Mandate requires that all businesses with 50 or more full-time equivalent employees (FTE) provide health insurance to at least 95% of their full-time employees and dependents up to age 26, or pay a fee. If the employer does not cover workers, they will be charged $2,000 per full time employee (excluding the first 30 employees), per month.
Are there any important dates coming up that will affect me?
- Starting on November 15th, 2015 those with 100 full-timers or less can use the SHOP.
- Starting in 2016 employers with 50-99 full-time equivalent employees will have to insure their full-time workforce as well.
- On January 1st, 2016 employers with 50 or more full-time equivalent employees will be required to offer health insurance coverage.