Small Business Owner’s Guide to Health Insurance

THealth Insurance. It can be any small business owner’s nightmare as it requires huge decisions to be made for your company before you can continue working at a normal pace. As you surely know, the health insurance landscape is constantly changing and, unfortunately, it’s not getting any easier; but that’s what we’re here for. Here is everything you need to know about health insurance as a small business owner in 2015:

The Affordable Care Act

The Affordable Care Act (ACA) is a federal health law that has been in effect since 2010, however it will undergo a new set of reforms set to begin on January 1, 2016. The ACA will grant employers with less than 50 employees the option to provide health insurance for them, free of punishment on their taxes. Since 2014, the ACA required insurance agencies to sell individual and small group plans to everyone at the same price, regardless of their health. The new law, which was designed with the intention to provide workers with previous illnesses affordable health care, has caused a spike in prices for small to medium-sized businesses with healthy employees.

Tax Credits

Fortunately, there are many ways for small businesses to get financial assistance through federal funding. Tax credits, for example, can deduct up to 50% of the premiums you pay for your employees. To qualify for tax credits your company must have 25 or fewer employees, an average annual wage of less than $50,000, and purchase coverage through the Small Business Health Options Program (SHOP), which is a government sponsored online platform that offers help to small business owners in order to access affordable health insurance.

Grandfathered & Grandmothered Plans

The terms Grandfathered Plans and Grandmothered Plans are often thrown into the mix of conversation when talking about health insurance. While the plans were rather self-explanatory in previous years, the ACA has completely altered their meanings. To the advantage of the insurance bearers, any plan that was created before the establishment of the ACA will be ‘grandfathered’ in with very minimal changes in covered amounts and cost sharing. Any new plan, however, will be required to meet all of the standards set by the ACA. It is critical for small business owners to understand each of these statutes and carefully consider each one, as any changes made in health insurance policy can have a large impact on what your company will face moving forward.

Compliance Requirements

There are several new requirements and reforms of the ACA, and it is very important to employers to stay up to date and compliant with them. We have highlighted the major changes that have taken place:

–          Summary of Benefits and Coverage: You will be responsible for ensuring that all of your employees receive the SBC, which will be provided to you by your insurance carrier.

–          Report W-2 Forms Cost: If you file more than 250 W-2s in a year you must calculate the aggregate cost of the employer-sponsored health care coverage and report the information on the W-2 forms.

–          Notice of Coverage Options: The NCO provides employees with information about the exchanges and availability of premium tax credits within the Health Insurance Marketplace. You must provide a NCO document to all employees within 14 days of their respective start date.

–          1095-C: At the conclusion of each year, Applicable Large Employers will be required to provide a 1095-C, which states whether an employee was eligible for health insurance and the price of the lowest cost plan offered that still meets Federal standards.

–          Cadillac Plan Tax: A “Cadillac Plan” refers to a very expensive health insurance plan. Regardless of how nice the benefits are that come with the insurance, the ACA will tax 40% on all single coverage premiums that exceed $10,200 and $28,500 for non-single coverage.

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