What is Obamacare and when will it become effective?
The Patient Protection and Affordable Care Act, or Obamacare as it is commonly referred to, is the most comprehensive overhaul of the healthcare system in history. Over 50 million Americans are currently uninsured. Obamacare intends to attack that number with a vengeance. While 2012 and 2013 have and will bring changes, the big ones become effective in 2014. That is the year employer mandates come into effect and mandates on individuals as well. Many small businesses will become subject to the Obamacare rules.
Do I have to provide health insurance to my employees?
In 2014, under the employer mandate, employers are required to offer a minimum level of health insurance to full-time employees, or pay a penalty. This requirement is for employers with at least 50 full-time employees with full-time defined as at least 30 hours per week.
- Failure to offer coverage to eligible employees will result in a $2,000 per year penalty, per full-time employee in excess of 30 employees, if at least one employee receives a subsidy amount instead of direct coverage.
- Failure to offer affordable or minimum level of coverage will result in a $3,000 penalty per year, per full-time employee who declines a company plan and receives a subsidy instead of direct coverage
These penalties are exclusive, but not intended to both apply.
What level of insurance do I have to provide if my business has at least 50 full-time employees?
A business must offer affordable or minimum level of coverage to full-time employees if the business is subject to the coverage rules.
- Affordable coverage means the employee’s contribution for employee-only coverage must be below 9.5% of his/her W-2 income
- The minimum level of coverage means the plan must cover at least 60% of covered health expenses
Can I limit worker’s hours in order to fall under the 50 full-time employee minimums?
So far, nothing in the law prohibits adjusting the hours of workers to allow a business to fall under the 50 full-time employee minimum. Bringing the number of full-time employees to fewer than 50 seems to be the most common strategy. This is not to say that further modifications to Obamacare won’t be enacted in the future. Each business must decide what actions to take to balance the welfare of its employees with the realities of running a business for profit.