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The (small) Business End of the New Health Care Law

Hey blog readers!  This is Heather Heppner with the AARP Illinois Communications Team back with your Tuesday health care law post.  This week and next, we'll be covering the "business" end of the new health care law; this week focusing on how the law impacts small businesses, and next week I'll focus on the tax implications of the new law.  Don't forgot to check back every Tuesday for more info on how the new health care law impacts you and your family!  

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Do you own a small business?


First, let's get one thing federal law requires businesses of any size - large or small - to offer insurance.  That's been the law long before the Affordable Care Act was passed.  However, the health care law makes providing coverage to your employees a lot easier.  As a small business owner you can join with other small businesses statewide to get better pricing for health coverage for your employees.  The Health Insurance Marketplace for small businesses (called SHOP) allows you to compare plans, choose the plan you want to be available to your employees, and set the dollar amount you can contribute toward your employees' premiums.  Then your employees simply go online and sign up - reducing paperwork and administrative costs.

If you have UNDER 50 employees:

You are not required to offer health insurance and you face no penalties if you don't.  If you do wish to make health coverage available to your employees, you can shop for a plan to offer them in your state's Health Insurance Marketplace.

If you have 50 or MORE employees:

In 2014 you are not required to offer health insurance and face no penalties.  However, starting in 2015 if you have 50 or more full-time equivalent employees and do not offer them health insurance, you will have to pay a penalty if any of your full-time employees get help paying their premiums through the Marketplace.


Small businesses can get a tax credit to help make the cost of covering your employees more affordable.  If you offer health insurance and your company has fewer than 25 employees with average wages of less than $50,000 you will qualify for a tax credit.  In 2013, the tax credit covers up to 35% of the cost of providing insurance.  By 2014, up to 50% of your costs of providing insurance through the Marketplace may be covered.  To find out more about the tax credit, how to count your employees, and calculate any penalties, visit the IRS website.

Are you self-employed?


If you are self-employed you are treated as an individual rather than a small business.  Just like everyone else, you will be required to have health insurance or pay a penalty.  To obtain health insurance, you will shop in the individual Health Insurance Marketplace in your state.  All plans offered in the Health Insurance Marketplace are required to cover essential benefits like doctor visits, emergency care, prescriptions and preventative care.  You can begin shopping for coverage October 1, 2013 and your coverage will be effective January 1, 2014.

Are you employed in a small business?


If your employer offers health insurance, your employer will select a health insurance plan and decide how much it will contribute to the cost of your monthly premium.  At first, most employers can offer only one plan, but starting in 2015 your employer will be able to select multiple plans you can choose from.  You can reject the coverage offered by your employer only if the cost of your premiums in the employer's plan is more than 9.5% of your income.  In that case, you would be able to purchase your insurance through the Health Insurance Marketplace.

If your employer does not offer health insurance, you can shop for coverage in the individual Health Insurance Marketplace.  You may be able to get financial help with your premiums and other costs, depending on your income. When you apply for insurance, the Marketplace will determine what financial help you can get.

Until next healthy!


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