Fewer Than 50 Staffers? Your Four Main Obamacare Options
Small businesses with fewer than 50 full-time employees -- or the equivalent -- as defined by the U.S. Affordable Care Act may wonder what they should do to prepare for employee open enrollment on the new healthcare exchanges this October.
If you're among those with questions, watch this recent webinar hosted by a state office of the U.S. Small Business Administration. In it, Frank Knapp Jr., president and CEO of the South Carolina Small Business Chamber of Commerce, shares the main options. We've listed the highlights below, but you can access it yourself here.
Option 1: Do nothing. Businesses with fewer than 50 "full-time-equivalent" employees aren't obligated to provide coverage under the ACA. These businesses can opt out of providing health insurance and take no action. In this scenario, employees will be responsible for obtaining their own health insurance and will be eligible for government premium subsidies if they qualify based on income and if they purchase coverage on the individual exchanges. Bear in mind that the law defines full-timers as employees who work, on average, at least 30 hours weekly, and counts the hours worked by part-timers toward an employer's number of full-time-equivalent workers.
To note: You may decide to "do nothing" as a business owner, but you're still required (as an individual) to obtain health insurance for yourself and family, either via the exchange, outside the exchange or through your spouse's employer.
Option 2: Do not offer health insurance, but offer help. These companies can find an insurance agent or broker to guide employees through the exchange, and help them choose the most appropriate coverage for themselves and their families. Qualifying employees will be eligible for subsidies under this scenario as well. Keep in mind that subsidies are not just for low-income Americans; many middle-class individuals and families will qualify as well. Brokers receive commissions from the exchanges and might negotiate fees with businesses, depending on the additional services they can offer you.
Option 3: Use the exchanges to offer one plan for all employees. Offer health insurance to employees through the small-business exchange in your state, choosing one plan for all employees. You can do this on your own or consult with an insurance broker or agent who also can handle enrollment. Employees enrolled in this plan will not be eligible for government premium subsidies. (The Obama administration expects that employers eventually will be able to offer employees a choice of plans on the small-business exchanges for coverage starting in 2015.)
Option 4: Obtain health insurance for employees outside of the exchange. Employers may do this on their own or through a broker or agent. By securing group health insurance outside the exchange, however, the employer will become ineligible for the tax credits that are available to many small businesses offering coverage through the official, state-based marketplaces. Employees won't be eligible for government premium assistance in this scenario.