Changes

Although small businesses with fewer than 50 employees do not run the risk of paying the employer mandate for not providing health care insurance to its employees, there are some regulations and provisions associated with the ACA that increase the cost of providing and receiving health care (for those that do choose to do so). Employers are required to provide their employees with a Summary of Benefits and Coverage Disclosure Rules (SBC’s), a standard form that essentially explains to employees what their plan entails (noncompliance may result in a further penalty). Additionally, the ACA institutes a cap on the maximum contribution an employee can make toward a flexible spending arrangement ($2500), increases Medicare withholdings on employees with wages over $200,000 and $250,000 for married joint filers, and assesses net investment income for Medicare (taxable capital gains, dividends, rents, royalties, and interests) for single filers with a Modified Adjusted Gross Income of $200,000 for a single filer (and $250,000 for married joint filers). The ACA also institutes a 90-day maximum waiting period for employees to provide health care coverage employees who are eligible, as well as penalties for surpassing the 90-day period. The ACA incentivizes employers, using inducements, such as as subsidies on health insurance plans, to offer Workplace Wellness Programs that satisfy the federally accepted requirements. For employers that sponsor self-insured plans, there is another required information reporting that is separate from the information reporting required for employers with more than 50 FTE [https://www.sba.gov/content/employers-with-up-to-50-employees].

Although, health care is not a mandatory service for small businesses with fewer than 50 FTE many small businesses still provide health insurance for their employees. These companies, along with large companies, are seeing rising premiums on their insurance due to the ACA stipulation that health care companies cannot deny coverage when considering an individual's health. However, there are options to compensate with the increased (while also non-mandatory) cost of providing health care, the most obvious of which would entail the end of employee-sponsored health insurance coverage by small businesses or simply increasing the employee contribution to coverage.

Small businesses can try to save on rising health care costs in various ways, such as participating in the SHOP Exchange, negotiating on private insurance plans, converting their employee group plans into individual employer-sponsored plans, such as Health Savings Accounts or Health Reimbursement Accounts (HSA’s and HRA’s), switching to direct primary care, or using Workplace Wellness Programs [http://www.cnbc.com/2015/01/08/5-smart-ways-small-firms-can-slash-health-care-costs.html].