Business Adviser Magazine September 2013 | Page 20

How Obamacare Insurance Requirements Apply to the Small Business Owner
Small business owners need to know how the Obamacare rules for insurance requirements are going to affect them.

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nder the “Affordable Care Act,” large employers with 50 or more full-time equivalent employees are required to

of $2,000 per employee (minus the first 30). Employers who offer qualified but unaffordable coverage will be subject to the lesser of $3,000 per subsidized employee or $2,000 per employee (minus the first 30).

provide health insurance for their employees, beginning in 2014, or face a tax penalty. On July 2, 2013, the Obama administration delayed by one year the employer mandate so it will now take effect in 2015. The president did not delay the start of the individual mandate, which will go into effect on January 1, 2014.

Individual Mandate
Effective January 1, 2014, Obamacare requires all Americans to have health insurance coverage or pay a penalty. Since many employers are small business owners with less than 50 employees, many individuals will not be covered under an employer-sponsored plan. Self-employed individuals will also be subject to the individual mandate. The penalty is scheduled to be phased in over the next several years as follows: • For 2014, the penalty is the greater of $95 or 1% of applicable income. • For 2015, the penalty is the greater of $325 or 2% of applicable income. • For 2016, the penalty is the greater of $695 or 2.5% of applicable income. • For 2017, the $695 amount is indexed for inflation. Applicable income is the excess of household income over the threshold filing amount. Generally, the annual penalty cannot exceed the cost of a bronze level plan, and an overall cap will apply to family payments. The penalty for children is half the amount for adults (Fishman). individuals who have a religious exemption, individuals who are not required to file a return, and individuals who cannot afford coverage based on formulas contained in the law (if minimum amount of premiums they must pay is more than 8% of Adjusted Household Income).

Onl ine Health Insurance Exchange
Individuals and small businesses will be able to obtain health coverage through their state’s online health insurance exchange by 2014. Governor Rick Perry has chosen not to implement a state-run health insurance exchange in Texas. The federal government will operate exchanges in those states that choose not to establish an exchange (Anderson). There will be four levels of coverage available: *bronze, which covers 60% of covered benefits, *silver, which covers 70%, *gold, which covers 80%, and *platinum, which covers 90%. Plans will be required to cap the maximum out-of-pocket costs for enrollees. The current limits are $5,950 for an individual and $11,900 for a family (Fishman). In addition, health insurers will not be able to deny coverage because of preexisting medical conditions.

Tax Credits
A premium assistance credit will be available for individuals who purchase health insurance from a state exchange if their income is between 100% and 400% of the federal poverty line. This credit will be paid directly to health insurers by the federal government. You can obtain an estimate of the credit you could qualify for by using the “Kaiser Health Reform Subsidy Calculator”(Fishman). http://kff.org/interactive/subsidy-calculator/ Small employers with 25 or fewer employees who provide health insurance may also be eligible for tax credits.

Employer Mandate – Large Employers
A large employer (50 or more full-time equivalent employees) will be subject to one of two penalties if at least one of its employees receives government subsidies to help purchase insurance in the exchange. Employers who do not provide minimum essential coverage to at least 95% of their FT employees will be subject to a penalty

Sources:
Anderson, Carla. “Texas Health Insurance Exchange: Gov. Perry Announces State will Rely on Federal Insurance Marketplace.” Healthinsurance.org N.p., 16 July 2013. Web. 19 July 2013. Fishman, Stephen. “What Obamacare Means to the Self-Employed.” Nolo.com N.p., Feb. 2013. Web. 19 July 2013.

Exemption from Individual Mandate Penalty
Certain individuals will be exempt from the individual mandate. Among them are

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