Small-business owners have healthcare options

Small-business owners will have to make important health care decisions in a few months. That’s because enrollment begins for the new Healthcare Insurance Marketplace on Oct. 1 and businesses will have some tough choices to make.

The Marketplace is a major initiative of the Affordable Care Act (ACA). It is where business owners can choose among participating private insurance companies to provide the best options for themselves and their employees.

According to the Centers for Medicare and Medicaid Services (CMS), a division of Health and Human Services, insurance coverage purchased though the Marketplace was to begin on Jan. 1, 2014. But the government is no longer specifying the date. So CMS advises you to sign up during the enrollment period but not to cancel your existing insurance until the new coverage commences.

Small businesses with fewer than 100 employees are eligible to purchase health insurance through the Small Business Health Options Program, called “SHOP.” It will be a portal within the Marketplace site.

“The Affordable Care Act provides small-business owners with access and opportunity to provide affordable health care options for their employees,” said Karen Mills, who recently resigned as the U.S. Small Business Administration’s administrator and is awaiting her replacement. “SBA’s new Affordable Care Act web page and blog will serve as a resource for small business owners who want learn more about how to take advantage of these benefits.”

SBA’s site, sba.gov/healthcare, is divided into four sections:

They are self-employed

Employers with fewer than 25 employees

Employers with fewer than 50 fmployees

Employers with 50 or more employees.

A sole proprietor who has no other employees, for example, can click on the self-employed section. It says that self-employed individuals will be required to “have basic health insurance coverage (known as minimum essential coverage), qualify for an exemption or make a shared responsibility payment.”

That means unless you qualify for an exemption, ACA mandates you to buy health insurance or pay a penalty.

For companies with more than one but less that 50 employees, there is a wide array of options and tax credits to encourage employers to purchase health insurance for themselves and their workers. The options will be explained on the SHOP site.

A company with 50 full-time employees or more, must purchase insurance for its employees or pay penalties. Two part-time employees count as one full-time employee.

If the company chooses not to insure its employees in 2014, the penalty is $2,000 multiplied by the number of full-time employees, minus 30. That means a company with 50 employees would pay $40,000 annually unless they qualify for an exemption.

In some situations, it could become less expensive for a company to pay the penalty and tell its employees that they are on their own. Keep in mind, however, that most individuals are also mandated to purchase insurance and the company’s morale could suffer if its employees are left to fend for themselves.

For individuals “that decide not to buy health insurance, the penalty will be one percent of your income in 2014, and two percent in 2015,” says Bill Steffen, a health insurance agent and consultant. For low and moderate income individuals who “could not afford health insurance before, there will be subsidies available to help them secure coverage.”

In a notice of rulemaking, Steven T. Miller, deputy commissioner for services and enforcement for the Internal Revenue Service, writes that subsidies in the form of tax credits will be “generally available to individuals and families with incomes between 100 percent and 400 percent of the Federal Poverty Level.”

As an example, Miller says that a family of four with income between $23,550 and $94,200 may be eligible for tax credits on a sliding income scale. “The Congressional Budget Office estimates that when the Affordable Care Act is fully phased in, the premium tax credit will help 20 million Americans afford health insurance.” Miller does not say how much it will cost taxpayers.

Jerry Chautin’s 30-year corporate and entrepreneurial career was in business lending, commercial real estate lending and mortgage banking. He is a volunteer business mentor with Atlanta SCORE.

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