Changes

Despite all of the backlash the Patient Protection and Affordable Care Act, or Obamacare, has received for its perceived potential destruction on small businesses, for the most part, small businesses with under 50 full time employees are not greatly devastated by the Act. In fact, companies with fewer than 50 employees, which make up a large portion of small businesses, are not penalized at all for not providing comprehensive and affordable health care to their employees. Thus, if employers with less than 50 FTE find themselves unable or unwilling to accommodate the rising costs of health care, they can simply opt out of providing employee-sponsored health insurance. Those who do decide to provide employer-sponsored health insurance will have to deal with the issue of rising premiums and other slightly increased regulations.

Although small businesses with less than 50 employees do not have to risk 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). The ACA also institutes a cap on the maximum contribution an employee can make toward a flexible spending arrangement ($2500), increases Medicare withholding 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 institutes a 90-day maximum waiting period for employees to provide health care coverage employees who eligible and creates incentives for employers to put in place Workplace Wellness Programs. For employers that sponsor self-insured plans, there is an additional information reporting required that is separate from information reporting required for employers with more than 50 FTE [https://www.sba.gov/content/employers-with-up-to-50-employees].

Options for small businesses with fewer than 50 employees that still provide health care