Small Business Health Plans: Where Do You Fit In?

If you’re running a small business, then health care is probably a hot topic for you and your employees. Let’s face it: the new healthcare reform laws will force small business owners, executives and entrepreneurs to make tough decisions regarding their employees’ health benefits.

Good News for the Little Guys…

As of right now, the Patient Protection and Affordable Care Act (PPACA) proves to be beneficial for those who are self-employed or run a small business. If your small business has 25 employees or fewer, you’re financially in luck. Here is a closer look at how you will profit:

  • You may qualify for a small business tax credit of up to 35 percent, increasing to 50 percent by 2014.
  • Starting in 2014, individuals who are self-employed may qualify for premium assistance. Those earning up to 400 percent of the poverty level ($43,320 for an individual or $88,200 for a family of four) will qualify for a federal subsidy to help them with the cost of purchasing health care.
  • Small businesses with fewer than 50 employees are exempt from mandatory employer-provided coverage.

…Challenges for Bigger Businesses

But what if your business has more than 25 employees? Unfortunately, you will face some challenges over the next few years. Here are the details you need to know:

Happening Right Now

  • Tax Credits: If you have over 25 employees, you do NOT get a small business tax credit. If your small business grows to more than 25 employees during the year, tax credits phase out as your firm size and average wage increases.
  • Small Business Health Insurance Tax: An annual fee on health insurance providers will be passed on to consumers this year.

Coming in 2014, a Big Year For Businesses

  • Health Insurance Exchanges: Small Business Health Options Programs, or SHOP exchanges, will take effect. These are open to individuals and small businesses with up to 100 employees, enabling them to pool together to have greater buying power, and allowing them to choose among a multitude of plans that would provide better coverage at lower costs. Small businesses with over 100 employees cannot participate as of now.
  • Insurance Requirements for Employers (Expect to Pay Up): Employers with 50 or more employees will have to provide health insurance or pay a stiff penalty of $2,000 per employee or higher (the first 30 employees are excluded). If you have more than 50 full-time employees, and you offer insurance and one or more employees are receiving premium subsidies, the penalty is lesser of $3,000 per subsidized employee or $2,000 per full-time employee.

Coming in 2018

  • The “Cadillac” Tax Plan: Insurers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a non-deductible 40 percent tax on the excess cost of the premium. This could be a big burden on small businesses, as many premiums are already at that rate for even basic coverage. Unfortunately, insurers won’t pay this tax and it will be passed on to the consumer in the form of benefit reductions.

While many of these changes won’t take effect for a few years, there are steps you can take now to help you protect your company’s finances and secure the bottom line. At Visor, our main focus is to help small businesses find a better, affordable and easier health plan for their employees. Our vision is to get rid of group health plans and educate both employers and employees on the benefits of individual insurance plans. Plan ahead and get to know how Visor Betterfits can help you.