By: Alexandra Gladu
Since its passage in 2010, the Obama administration’s Affordable Care Act – aka Obamacare – has been in the news virtually nonstop. Despite all this chatter, a new survey from the U.S. Chamber of Commerce shows that one in four small business owners doesn’t understand how the policies will affect their business.
As with any large-scale piece of legislation, the Affordable Care Act can seem too complex and confusing for the average person to interpret. Add to that the political gridlock that is constantly changing and delaying the policies, and trying to understand the law seems altogether useless. With the implementation process moving along, though, it is important that small business owners across the country are prepared to comply with the new law of the land.
Perhaps the most talked-about provision of the Affordable Care Act relating to small businesses is the so-called “employer mandate,” which will require companies with 50 or more employees to either provide coverage for their full-time employees or pay a fine of at least $40,000 to the federal government. Although it was supposed to take effect in 2014, the Obama administration recently announced that it will not enforce this requirement until 2015, giving small businesses some much-needed time to adjust.
An overwhelming majority – about 96 percent – of the businesses that will be affected by the employer mandate already provide coverage to their full-time employees, however they may not provide the right coverage for Obamacare. According to Women Impacting Public Policy, a nonpartisan organization that advocates on behalf of women-owned businesses, a challenge for small businesses with respect to the mandate will be meeting the requirement that coverage extend to all full-time employees. Traditionally, a full-time employee is one who works 40 hours per week. The Affordable Care Act, however, defines a full-time employee as one who works just 30 hours per week. This means that businesses may be responsible for more coverage, even if they already cover their full-time employees. Additionally, the mandate requires employers to offer coverage that costs less than 9.5 percent of the employee’s income, which could also force small businesses to change or extend their policies.
Also under the Affordable Care Act, businesses with 25 or fewer full-time employees are eligible for a substantial tax credit. The Small Business Health Care Tax Credit offers these firms up to 50 percent of their contribution toward employees’ premium costs if the business pays at least 50 percent of those premium costs. For example, if a business with 25 employees contributes $70,000 a year to employees’ premium costs, that business is eligible for a $35,000 tax credit.
Despite its complexity, the Affordable Care Act is quickly changing the landscape of health care in the United States. To keep up with the changes and prepare your business, you can find up-to-date information from the White House at www.whitehouse.gov/healthreform and wwww.healthcare.gov. For more personalized information, the Obama administration has created an online Health Care Changes Wizard that allows business owners to find the information they need based on the size, location, and current health care policies of their company. You can access the Wizard for free at www.business.usa.gov/healthcare. You can also follow the legislative updates and analyses provided by WIPP.
Alex is a rising junior at the University of North Carolina at Chapel Hill, where she is double-majoring in Public Relations and Spanish. Since becoming an intern with Independent We Stand, she has fully adopted the ‘buy local’ lifestyle. Her favorite indie business is Sugarland, a bakery in Chapel Hill, N.C, where she has been known to go a little cupcake crazy. She hopes to attend law school and pursue a career in nonprofit or political communication.