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A Critical Breakdown of Changing Health Insurance

1275249_study_tableThe Patient Protection and Affordable Care Act, also coined Obamacare, was passed in 2010 and will go into effect in 2014. Several provisions of the law will directly effect small-businesses and the way employee health insurance is provided. Small business owners will be able to shop in an open and competitive marketplace for insurance plans; enrollment will begin October 1st. The specifics of the reform are broke down by business size as it pertains to employee count. Here is a quick synopsis of the categories.


Starting in 2014 the changing law requires all individuals to have basic health insurance coverage. Some may qualify for an exemption. A new competitive health insurance marketplace will offer coverage for individuals and small businesses effective January 1, 2014. Open enrollment will begin October 1, 2013. This marketplace, Small Business Health Options Program (SHOP), will offer different benefit packages based on cost and coverage, and are designed to be as competitive to entrepreneurs as to large businesses. Additionally, the Medicaid program eligibility will be expanding, but the specifics will be determined on a state level.

Fewer than 25 employees

A Health Care Tax Credit is designed to enable small employers to purchase health insurance coverage for employees. This tax credit is set to increase up to 50{7e4ee7cd997d36f6dec43befd6b19c37edf0959bbf61766e988f901dd91e96d7} in 2014, when contribution levels are within parameters of full-time equivalent employees (FTE’s) and average annual wages. The business will have access to SHOP, will be susceptible to notification requirements, expect a change in new hire waiting periods, have added benefits for participating in wellness programs, and insurance coverage reporting requirements.

Up to 50 employees

The same rules and provisions still apply in regard to available credits, SHOP access, and reporting and notification requirements, but small businesses, with less than 50 employees, are not required to offer health coverage. However, all individuals are required to have coverage. Full-time, in an FTE count, is any person working at least 30 hours per week. There are multiple coverage options that a business may take to assist employees in obtaining the mandatory coverage.

More than 50 employees

Starting in 2015 employers with more than 50 FTE’s may be assessed a fine for not offering affordable health insurance. Additionally, these businesses will be required to adhere to the disclosure and reporting requirements.

More information on the health care reform can be found on the U.S. Small Business Administration website. As a business owner or manager, it will be a worthwhile investment to better understand the provisions and how they will impact your business and employees.

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