Myth vs. Fact- Myth #1: All Businesses Will Be Required to Provide Health Insurance to All of Their Employees
by Meredith K. Olafson, Meredith K. Olafson is Senior Policy Advisor for the U.S. Small Business Administration
February 20, 2013, 4:00 pm
As a business owner, it’s important to understand how the Affordable Care Act can affect your business. However, with so many misconceptions about how the Affordable Care Act works, this can be difficult. To clarify the myths versus facts, we’re launching a new blog series called “Myth vs. Fact: The Affordable Care Act and Small Business”.
This blog covers one of the most common myths we’ve seen out there:
Myth: All businesses will be required to provide health insurance to all of their employees.
Fact: Employers are not required to provide coverage to their employees under the Affordable Care Act. However, starting in 2014, some businesses that do not offer health coverage to their full-time employees may be subject to a shared responsibility payment under the health care law.
How do I know if I may be subject to an Employer Shared Responsibility Payment?
Businesses with 50 or more full-time or full-time equivalent (FTE) employees that do not offer affordable health insurance that provides a minimum level of coverage to their full-time employees (and dependent children under the age of 26 starting in 2015) may be subject to a shared responsibility payment if at least one of their full-time employees receives a premium tax credit in an Affordable Insurance Exchange, or Marketplace. For the purposes of these provisions, a full-time employee is one who is employed an average of at least 30 hours per week.
Businesses will not be affected by these provisions if they already offer affordable health coverage that provides a minimum level of coverage to their full-time employees, which is the vast majority of these businesses.
Businesses with fewer than 50 full-time or FTE employees are generally not affected by these provisions. However, it’s important to know that if companies have a common owner or are otherwise related, their total combined number of employees is used to determine whether each separate company is subject to these provisions — even if none of the member companies individually employ 50 or more full-time or FTE employees.
How can I find out if I meet the threshold number of 50 or more full-time or FTE employees?
To assist employers, the IRS has developed a helpful set of Q&As on the Employer Shared Responsibility provisions. The IRS has also issued a set of proposed rules relating to the Employer Shared Responsibility provisions, and is accepting written or electronic comments by or before March 18, 2013.
Understand the Affordable Care Act as a Small Business Owner
What does the health care law mean to you? Check out these resources that explain the key provisions of the law plus an overview of what is changing and when.
For a clear overview of how the law impacts small businesses, the Small Businesses and the Affordable Care Act guide breaks down the top things you need to know, including information about the following:
The Small Business Tax Credit and your eligibility to claim it.
Affordable Insurance Marketplaces, known as the Small Business Health Options Program (SHOP), will open on January 1, 2014 and give small employers buying power—similar to what large businesses have to get better choices and lower prices. The SHOP Marketplaces will work with new insurance reforms and tax credits provided by the Affordable Care Act to help lower barriers to offering health insurance that small employers face. Visit Healthcare.gov’s small business landing page for the latest information on SHOP, and review the get-ready checklist for small business owners. Enrollment in SHOP begins on October 1, 2013.
This useful Small Business Q&A also helps you understand your rights and responsibilities as a small business owner.
Find Healthcare Insurance Options for Your Small Business
Looking for insurance for yourself or your employees? Healthcare.gov’s Insurance Finder organizes and presents information and pricing collected from insurers to help you better understand your options. Enter some basic data and the tool will filter your options accordingly.