The Affordable Care Act (ACA) made sweeping changes to America’s healthcare system. And for small businesses, those changes have a big impact.
If your firm has 50 or more employees, the ACA requires that you provide affordable coverage to your employees. If your firm has fewer than 50 employees, you don’t have to offer health insurance — but you do have to tell your employees how to find coverage. So, whether you’re shopping for a group plan because it’s required by law, or because you think it’s a smart move for your small firm, check out the nine most important ways that the ACA (a.k.a. Obamacare) affects your business.
1. The ACA Changes The Way You SHOP
A fundamental goal of Obamacare is to make it easy for individuals and small business owners to shop for affordable health insurance. The Small Business Health Options Program (SHOP) Marketplace is an online exchange that offers a variety of ACA-compliant plans for firms with 100 or fewer employees. (California’s exchange is called Covered California for Small Business.)
But you don’t have to shop through a government website to find coverage! Instead, you can get free support from a licensed, independent agent who will help you find and enroll in a group health plan. For more information, talk to a licensed professional at Regency West Insurance Services.
2. It Requires All Plans To Provide Essential Benefits
No matter which insurance carriers or plan types you offer to employees, every plan must cover 10 essential health benefits. These benefits include the following categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health services, including substance abuse and behavioral health treatment
- Prescription drugs
- Rehab services and devices
- Laboratory services
- Preventive and wellness services
- Pediatric care, including oral and vision care
With guaranteed access to preventive and emergency care, your employees can maintain their health — and boost their workplace productivity — for the long run.
3. It Offers Tax Credits To Eligible Employers
Employer-sponsored coverage is a helpful benefit to your employees. But it’s also expensive — which is why the government could cut you a break on your health insurance costs!
Do you have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 (excluding owners)? Do you plan to contribute 50% or more toward their health insurance premiums? If so, you could qualify for a small business tax credit. These government-funded subsidies, targeted for businesses with low to moderate-income employees, reduce your share of the cost of employee premiums.
4. It Establishes The Employer Mandate
Under Obamacare’s employer shared responsibility provisions, firms with 50 or more employees must provide “affordable coverage” that meets the “minimum value” standard. Here’s what that means:
- The group plan must be designed to pay at least 60% of the total cost of medical services for the group.
- The group plan’s premiums must not equal 9.5% or more of the employee’s household income. (This percentage cap is for the cost of the individual employee’s coverage, not for the cost of adding family members.)
- The group plan must include the 10 essential health benefits that we described earlier.
If your business has 49 or fewer full-time equivalent employees, you don’t have to offer health insurance to your employees. However, if your firm has 50 or more full-time equivalent employees, you must provide coverage — or else you could pay a penalty to the IRS.
5. It Requires You To Disclose Information About …
The Health Insurance Marketplace
Maybe your firm has less than 50 employees, and you decide not to offer group coverage to your employees. Obamacare requires that you at least provide certain information about employees’ options for enrolling in an ACA-compliant individual plan.
The Summary of Benefits and Coverage (SBC)
If you decide to offer a group health plan, you must provide employees with the “Summary of Benefits and Coverage” (SBC), a standard form that explains what the health plan covers and how much it costs.
6. It Sets A Maximum Waiting Period
If you offer employer-sponsored health insurance, coverage must begin within 90 days of an eligible employee’s start date.
7. It Promotes Healthier Workplaces
The ACA includes incentives for employee wellness programs that improve employee health and cut healthcare costs. These programs and activities encourage employees to achieve certain health goals, like joining a gym, lowering cholesterol levels, or quitting smoking. If the employee achieves a certain goal, you and the employee could be rewarded with a 30% cut in the total cost of coverage!
8. It Sets Up A Minimum Medical Loss Ratio
Under the ACA, insurance carriers must spend at least 80% of premium payments on medical care for the groups and individuals that they insure. If carriers don’t meet this requirement, they must provide rebates to the policyholder — i.e. you, the employer that sponsors the plan. This ACA provision protects you and your employees by ensuring that insurance carriers spend the bulk of their money on medical care, not administrative costs.
9. It Excludes Sole Proprietors
Before Obamacare, some states allowed sole business owners (“business groups of one”) to purchase group health insurance coverage. Under the ACA, that option has been eliminated. Now, sole proprietors must purchase coverage in the individual market.
If you’re self-employed, and you don’t have any employees who receive a W-2 tax form, you can get free help finding an ACA-compliant plan. Just talk to a licensed agent at Regency West Insurance Services.
Find A Group Health Plan Today!
Obamacare encourages all small businesses to provide affordable, quality health insurance to their employees. Are you ready to shop for a group health plan? Get immediate help from the insurance experts! Just go online at RegencyWestInsurance.com or give us a call at (858) 699-0286. When you speak to a licensed agent at Regency West Insurance, you will find coverage that maximizes benefits to you and your employees.