Defining a small business
A small business is defined as one that has 50 or less Full Time Equivalent employees. The ACA states that a FTE Employee works 30 hours a week. As this is not a standard for full time hours, businesses need to have a formula in place to calculate their full time employees taking into consideration that part time workers need to be included in the total. Adding one employee could tip the scales resulting in a small business changing status. Businesses could then face penalties if healthcare is not provided to employees.
The requirements of the Affordable Care Act affect all businesses whether small or large in terms of how health benefits are viewed, provided to employees and reported. Understanding the requirements of the ACA on your business is the most important step towards compliance. Without a clear understanding, you may miss your responsibilities incurring unnecessary fines. Accurate and consistent record keeping, and monitoring of hours worked to ensure employees are classified correctly is essential. Organisations must keep documentation of employee eligibility for healthcare, as well as employee’s awareness of their eligibility. This can be done either through electronic signature receipt or manual distribution of documentation with a signed receipt.
Healthcare Plan Options
As a small business there are options available to offer employees healthcare. The Small Business Health Options Program allows small businesses access to more affordable health plans. Also, businesses with less than 25 FTE employees can apply for tax credits to assist with the cost of providing healthcare for employees. Remember a large business must provide, as a minimum, a Minimum Essential Coverage Plan (MEC) and maximum employee contributions vary in some states.
Benefits of providing healthcare
While small businesses are not liable to fines for not providing healthcare, it is important to consider the benefits of doing so. Providing healthcare can lead to greater employee job satisfaction, increasing staff loyalty, and giving the business a competitive edge for hiring skilled and effective employees.
Who can help?
Businesses can employ a qualified consultant to ensure preparations are made. Advice is also available from the National Federation of Independent Business, Small Business Majority and the IRS.