What Small Business Owners Need to Know About the Affordable Care Act

The Affordable Care Act, commonly called Obamacare, is affecting small businesses right now. As a small business owner you need to dispel the myths, be aware of your responsibilities, and you may need to take action before October 1, 2013. The good news is it may not be as bad as you think. Here’s what you need to know right now:

1) The Affordable Care Act is NOT a government insurance plan. It is a federal statute that [intends to] make health insurance more available and regulated, provides for certain government subsidies to reduce the cost of insurance, requires employer involvement, and charges fees to certain individuals and businesses in some cases.

2) Open enrollment begins October 1, 2013. Many employers will be required to give notice to their employees before October 1, 2013 and within 14 days of an employee’s start date thereafter. The notice is generally required for most employers whether or not they offer health insurance. The intention of the notice is to notify employees of the Health Insurance Exchanges. Additionally, employers who offer insurance are required to include basic information about eligibility for the employer-sponsored plan. Employers can learn more here.

3) The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on the employees’ year-end W-2s, in Box 12 using the Code “DD.” Many employers were eligible for transition relief in 2012 and future years as the IRS has not issued final guidance for this reporting requirement. However, many payroll service providers began including this information in 2012 and will continue to do so in 2013 and beyond. The amount reported is informational only. Employers should check with their payroll service providers to determine what information they need to include.

4) No employer has to offer coverage. Let me say that again, NO EMPLOYER HAS TO OFFER COVERAGE. However, beginning on January 1, 2015 businesses with greater than 50 full-time equivalent (FTE) employees may have to make a shared responsibility payment. Businesses with fewer than 50 FTEs are not subject to Employer Shared Responsibility parts of the law and may use the Small Group Option Program (SHOP) to offer their employees coverage. For those with greater than 50 FTEs, you may need to make an Employer Shared Responsibility Payment if at least one of your full-time employees gets lower costs on their monthly premiums when buying insurance in the Marketplace. Employers can learn more about the Employer Shared Responsibility Payment here.

In summary, employers should be aware of the key items they may need to address. Employers who offer coverage may find the process quite different if dealing with products offered through the Marketplace. Employers can learn more by speaking with those professionals they already work with (insurance agents, attorneys, accountants, payroll companies, etc.) and can find a good deal of information on the web. HealthCare.gov is a great place to start and contains a section dedicated to small businesses.