Q: Do all small businesses have to participate in the Affordable Care Act? Can I opt out?
Whether or not you are required to offer insurance to your employees depends on the size of your business. If you have less than 50 full time employees, then you are not required to offer health insurance under the Affordable Care Act.
The system, however, works a bit differently than simply requiring participation. Instead, there is now a system of penalties and incentives, like tax breaks, to encourage small businesses to take part in the initiative. Again, if your small business employees under 50 full time workers, no penalties will be assessed for not offering health care coverage.
The responsibilities, obligations, benefits, and penalties as they pertain to businesses with more than 50 employees is different depending on several factors about the companies themselves.
Q: Are there any tax credits from healthcare reform my business is eligible for?
This is one of the most commonly asked questions by small business owners and it makes sense why. The answer is that yes, some of the companies that participate in the Small Business Health Options Program (SHOP) may indeed qualify for tax credits.
The criteria for qualification is as follows:
The resulting tax breaks, if your business qualifies, could be as much as half of what your business spends on premiums for healthcare coverage. Additionally, very small businesses, that is those with 10 or fewer FTEs can qualify for full credit of the premiums they pay for their FTEs.
If you own a tax-exempt business, there are two important notes you need to be aware of in order to claim your tax credit:
Q: Is my business considered a “small business” by the Affordable Care Act?
The IRS defines a small business as any with no more than 50 FTEs. This exact number may also differ from state to state, but this 50 or fewer qualification is what the Affordable Care Act uses to determine which businesses are eligible for the SHOP marketplace.
SHOP exists to streamline the process an employer goes through to buy and offer employees health coverage. Employers who are qualified can purchase insurance at any point during the year.
Self-employed business owners who are the sole proprietor are classified as individuals, not small businesses and therefore do not qualify for SHOP. However, these business owners do qualify for other programs like individual health insurance marketplaces and state healthcare programs.
Q: What sort of penalty is there for non-compliance?
If you have less than 50 FTEs, there are no penalties at all you need to worry about. If your business employees more than 50 FTEs, then there may be penalties for failing to offer adequate coverage.
Individuals who own their own business may incur penalties if they don’t have health insurance at the same rate any individual who doesn’t have health insurance will be penalized:
One of the most common myths about Health Care Reform is that small businesses will be penalized for not offering coverage. To be clear, only entrepreneurs who are not already otherwise properly ensured are the only small business owners at risk of penalty for not enrolling in healthcare, and that is only in certain circumstances.
To Sum it up…
Beyond compliance, small businesses that offer competitive health insurance benefits to employees are able to attract top-talent and more loyal employees. The bottom line is offering quality health insurance to your employees offers several advantages to the possible savings from not offering coverage.
Still have questions?
Please call us for a free appointment with Miami business attorney Yoel Molina in our Miami office at 305-548-5020.
Yoel “Mo” Molina, I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters..
"Mr. Molina has always been there for us with timely, reliable and competent advice. He is an important and valuable part of our team." Corporate Client Eric Delgado, President of American International Export, Inc., a worldwide importer and exporter of brand name appliance parts.
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"My name is Anastasia Yecke Gude and I am the owner of Healing Hands Therapeutic Massage LLC. In the process of my company’s growth and expansion, I suddenly found myself a few weeks ago in need of a 1099 contractor agreement, and I needed it ASAP. As in, the very next day! I contacted the Law Office of Yoel Molina and his assistant put me in touch with Mo. I sent him what I had drafted up and he replied within a few hours with suggested revisions and clarifications, as well as a few insights I had not even considered. I was thoroughly impressed by the quality of work he provided, especially considering the time crunch I put him in (sorry, Mo!). I definitely recommend his services to anyone in need of a good contract attorney, and I will be calling him again for future work…hopefully in less of a rush next time!"