SBA Aims to Clarify Health-Reform Law
The U.S. Small Business Administration aims to clear up misconceptions about the health-reform law with a new blog series launched last week, and comments the agency has received on its website indicate many entrepreneurs remain confused about the key provisions going into effect in January.
In the first installment of "Myth vs. Fact: The Affordable Care Act and Small Business," the SBA seeks to dispel what it calls a common misconception: that all businesses will be required to provide health coverage to all employees.
The agency explains that if employers with 50 or more full-time-equivalent workers don't offer their full-time employees coverage that meets certain standards – and if at least one full-time employee receives a premium tax credit to buy coverage on a health insurance exchange -- that business may be subject to a "shared responsibility payment."
This payment is essentially a fine that could run into the tens of thousands of dollars or higher, even though the government says the law, known informally as Obamacare, doesn't actually require employers to provide coverage. Employers with fewer than 50 workers aren't subject to the payments, although the SBA warned that related companies, or those with a common owner, may be affected if those businesses combined employ 50 or more workers.
The SBA provides links to other sources, including an IRS Q&A on the employer shared-responsibility provisions.
The agency's myth-busting post, written by senior policy advisor Meredith K. Olafson, had received 19 comments as of Monday afternoon.
One of them declared that "there are still so many unknowns about what taxes all employers will face, both small and large group employers."
Another post came from a home health-care employer with a large, high-turnover, minimum-wage work force who wanted to know how the business would be affected by offering health insurance and how soon after an employee's start date it would need to provide coverage.
Someone from an insurance agency offered an answer, saying it appears the company would need to offer coverage or pay the fines, and concluded, "Until the insurers finalize the new plans and pricing, it will be difficult to evaluate the additional cost to your business."
Individuals and small businesses are expected to be able to shop for approved plans on health-care exchanges, or marketplaces, as of October. Small businesses also will be able to buy coverage through traditional brokers.
Another person with 30 employees at one location and 20 at another asked in the SBA website comment section whether his or her business will be subject to the ACA, and whether splitting the location into two separate businesses would allow the owner to avoid the law's requirements for employers.
The SBA post seems to address the question, and the insurance professional who was volunteering unofficial answers said the Internal Revenue Service would view the two companies together in counting employees.
"Since you are so close to the 50 mark, you could reduce some employees to part-time to keep below the threshold. You also have the options to share the cost of coverage with your employees to lower your costs," that person wrote.