Health Care Law and Your Business

The Latest News About the Health Care Law

You may know that the Obama administration recently delayed final implementation of the Affordable Care Act for those businesses with more than 50 full-time employees (FTE) until January 1, 2015. However, the new health care law is affecting smaller businesses – including most sign companies – as we speak and will continue to do so well before that date.

For example, the Small Business Health Care Tax Credit currently helps small employers afford the cost of health care coverage for their employees and is specifically targeted for those employers with low- and moderate-income workers.

The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

Since 2010, businesses that have fewer than 25 full-time equivalent employees (FTEs), pay average annual wages below $50,000, and that contribute 50% or more toward employees’ self-only health insurance premiums may qualify for a small business tax credit of up to 35% to help offset the costs of insurance. In 2014, this tax credit goes up to 50% and is available to qualified small employers that participate in the Small Business Health Options Program (SHOP). Eligible small employers can claim the current credit through 2013, and the enhanced credit can be claimed for any two consecutive taxable years beginning in 2014 through the SHOP. To calculate your FTEs and average annual wages for the purposes of this credit, please use this Q&A from the IRS.

Starting in 2014, small employers with generally up to 50 employees will have access to the new health care insurance marketplaces through the Small Business Health Options Program (SHOP). Currently, small businesses may pay on average 18% more than big businesses for health insurance because of administrative costs. SHOP will offer small employers increased purchasing power to obtain a better choice of high-quality coverage at a lower cost. Costs are lowered because small employers can pool their risk. To enroll, eligible employers must have an office within the service area of the SHOP and offer SHOP coverage to all full-time employees.

Under Obamacare, employers covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), must provide written notification to their employees about the new Health Insurance Marketplace; inform employees that they may be eligible for a premium tax credit if they purchase coverage through the Marketplace; and advise employees that if they employee purchase a plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer.

Employers are required to provide this notice to all current employees by October 1, 2013, and to each new employee at the time of hire beginning October 1, 2013, regardless of plan enrollment status (if applicable) or of part-time or full-time status.
 

The Affordable Care and Patient Protection Act

ISA's Vice President of Advocacy David Hickey explains the impact of the Affordable Care and Patient Protection Act on sign companies.

View this page text as a pdf.

As of January 1, 2014, the Affordable Care and Patient Protection Act of 2010 will officially begin having a dramatic impact on many of America’s small businesses – including companies in the sign industry.

How the health care law impacts you depends on the size of your business. If your business has fewer than 50 full-time employees (FTE), then your business will not be directly affected. If your business has 50 or more FTE, then the law covers your business.

If your business has 50 or more FTE and does not provide insurance you will pay $2,000 per employee (minus the first 30). Example: a business with 50 employees, would pay $40,000 = $2,000 x (50 – 30).

If your business has 50 or more FTE and does provide insurance, and if at least one employee receives insurance subsidies through a state exchange (see below), the business will pay $3,000 per subsidized employee OR $2,000 per employee (minus the first 30) whichever is less. So a providing business with two subsidized employees would be fined $6,000. With 14 or more subsidized employees (above the tipping point for the formula), the penalty for a 50-employee firm would be $40,000.

Be sure to get the professional and expert advice that you need to comply with this law in timely fashion. Even if your business has fewer than 50 FTE, you should still seek counseling from the proper tax, accounting, legal and human resources experts just to make sure that all your bases are covered.

STATE EXCHANGE REQUIREMENTS

State exchanges have been established under this law to provide a forum for individuals and small businesses to choose the coverage that best fits their needs.

Beginning in late Summer or early Fall 2013, employers will be required to provide a written notice to employees on the availability of individual health insurance exchanges, including a description of services and methods of participation. Employers are also required to inform employees that they may be eligible for a premium tax credit and a subsidy within an individual health insurance exchange if the plan the employer provides covers less than 60% of total allowed health costs. Employers must notify employees that they would lose employer contributions for health coverage if that employee chose to purchase coverage through an individual health insurance exchange.  

Use this link to help your employers find out the latest information about their state exchange -

http://healthreform.kff.org/State-Exchange-Profiles-Page.aspx


INDIVIDUAL MANDATE  

On June 28, 2012, the U.S. Supreme Court ruled that the “individual mandate” in the health care law is constitutional. Beginning in 2014, nearly all U.S. citizens and legal residents will be required to qualifying health insurance coverage (public or private) or pay a tax for not carrying insurance.

The financial penalties, or taxes, begin in 2014 and increase each following in years following. In each year, the tax consists of the higher of a dollar amount or a percentage of household income. For a given household, the tax applies to each individual, up to a maximum of three. Following is the schedule of taxes:

• 2014: The higher of $95 per person (up to 3 people, or $285) OR 1.0% of taxable income.
• 2015: The higher of $325 per person (up to 3 people, or $975) OR 2.0% of taxable income.
• 2016: The higher of $695 per person (up to 3 people, or $2,085) OR 2.5% of taxable income.
• After 2016: The same as 2016, but adjusted annually for cost-of-living increases.

 

MORE RESOURCES

The following websites will assist you in understanding how the Affordable Care and Patient Protection Act of 2010 and we also recommend you to consult with your advisors on how this Act will affect your specific business.

http://www.dol.gov/ebsa/healthreform/

http://www.healthcare.gov/

http://www.nfib.org