The enactment of the Affordable Care Act (ACA), or Obamacare, spelled major changes in the way health insurance in the United States operates. On the upside, insurance providers must now meet minimum standards for essential coverage, offering a variety of preventive services, providing insurance to everyone (regardless of preexisting conditions), and creating affordable coverage options for low-income individuals and families, as well as other underserved groups like women, children, the elderly, the disabled, and more.
There were changes for those purchasing health insurance, as well. While many millions of previously uninsured Americans gained access to affordable coverage under Obamacare, the flipside is that the law now requires all U.S. citizens (and certain other U.S. residents) maintain mandatory minimum coverage. Those who fail to do so face ever-increasing penalties for failure to comply.
There is also an employee mandate associated with Obamacare, by which employers are required to provide health insurance coverage options for their employees. How do you know if your business is subject to this mandate? Here are the guidelines for businesses large and small.
Businesses of 100 Employees or More
Businesses employing 100 or more full time employees (FTE) were initially required to provide coverage for employees by 2014, but this deadline was subsequently pushed back to allow more time for affected companies to comply.
As it now stands, these businesses were required to provide health insurance coverage for 70% of FTE by 2015 and provide coverage for 95% of FTE by 2016. Furthermore, this coverage must meet mandatory minimum essential coverage standards under Obamacare in order to qualify.
Failure to comply will result in steep penalties for employers, amounting to $2,000 per month per employee not covered (excluding the first 30 employees). In other words, it’s in the best interest of employers to comply with the Obamacare mandate.
Businesses of 50 Employees or More
Businesses with 50-99 FTE were also granted a new deadline for meeting the employer mandate. They must now provide health insurance coverage for 95% of FTE by 2016 or face penalties.
Businesses with Fewer Than 50 Employees
The only businesses not required to comply with the employer mandate under Obamacare are those with fewer than 50 employees. However, these small businesses do have options to provide affordable health insurance benefits to their employees if they so choose thanks to SHOP, the Small Business Health Options Program.
This program is designed specifically to encourage small business to provide benefits to their employees by offering flexible, affordable options. While many small businesses can’t afford to provide the same benefits offered by larger companies, most are still interested in the opportunity to treat their employees well and provide the benefits that will help them to recruit competitive job applicants.
SHOP offers small businesses a vast array of options to work with nearly any budget, including the ability to choose plans and determine employer contributions.
Small businesses with fewer than 25 FTE with average annual wages under $50,000 may be eligible for employer tax credits should they elect to provide insurance options through SHOP. This credit could cover as much as 50% of premium costs.