Small Businesses Should Plan ahead in 2013 for Healthcare Reform Impact

The Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare or the federal health care law, was signed into law by President Obama on March 23, 2010. PPACA is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care. It provides a number of mechanisms—including mandates, subsidies, and tax credits to employers and individuals in order to increase the coverage rate.  Additional reforms are aimed at improving healthcare outcomes and streamlining the delivery of health care. PPACA is affecting insurance companies as well, requiring them to cover all applicants and offer the same rates regardless of pre-existing conditions or gender.

What will this law mean for small businesses when it takes effect in 2014?  A Wall Street Journal article from January 16, 2013, describes: “Small-business owners have been bracing for 2014, when a health-care law provision is scheduled to kick in, potentially subjecting them to penalties if they don’t offer health insurance. Many are planning to keep the number of “full-time-equivalent” employees under 50 to avoid being subject to the provisions of the law.”

But one critical detail that many business owners might not know is that the government will rely on data about the composition of their companies’ workforces this year in order to determine whether a firm will be liable under that provision. “That means employers need to adjust or manage the makeup of their staffs now—not in one year’s time, as many of them had likely planned.”

The article explains, “To determine the size of their firm, and whether it would be subject to the employer mandate, business owners have the choice to calculate their head counts by averaging the full 12 months of 2013 or a consecutive six-month period during the year.”

“Fines will be levied if insurance isn’t offered to their employees or their children up to age 26, and if at least one employee receives federal insurance subsidies. The penalty is $2,000 per year for each full-time employee in excess of 30 full-time employees. There are no penalties if part-time employees aren’t offered coverage.”

While many small businesses employ fewer than the 50 or more employees targeted by the law, those who do should check with their legal advisors to get help and plan ahead sooner rather than later.

Content contributed by Maria Brown, SoMNSourceLink.  SoMNSourceLink is a proud affiliate of U.S.SourceLink, America’s largest resource network for entrepreneurs.