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ACA and Entepreneurship (view source)
Revision as of 15:19, 27 September 2016
, 15:19, 27 September 2016no edit summary
The total number of FTEs can be computed by adding the number of full-time employees to aggregated number of part-time employees hours divided by 30. A full-time employee is considered to be any employee who worked on average more than 30 hours a week for 120 days or more in a year. Another criterion for determining mandate-exemption or tax-credit status is the average annual wage of employees. the annual average wage can be calculated by dividing the total wages paid by an employer by the number of FTEs, rounding down to the nearest $1,000.
While the ACA has received significant backlash for its perceived potential detriment to small businesses, for the most part, small businesses with fewer than 50 FTEs are not significantly burdened by the ACA. In fact, companies with fewer than 50 FTEs, which make up an overwhelming majority of small businesses, as evidenced previously, are exempt from the employer mandate.
However, the ACA’s small business size qualifications differ from the Small Business Association’s (SBA) established summary of size guidelines that defines which businesses qualify "as a small business concern for SBA and most other federal programs.” [ https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/summary-size-standards-industry-sector] SBA guidelines, a small business includes mining and non-manufacturing firms that employ under 500 employees and non-manufacturing firms that accumulate an annual receipt of less than $7.5 million in average annual receipts for non-manufacturing firms. Considering the SBA’s broader guidelines, while there may exist classifications that distinguish even further within industries, it is clear that that the ACA defines a small business much more narrowly than current SBA standards.Still, there are almost 6 million small businesses that fall under small business size classifications in the United States, and 90 percent of these small businesses employ fewer than 20 people [4http://obamacarefacts.com/obamacare-small-business/]. More precisely, 61 percent of firms employ between 3 and 9 employees, and 98 percent of firms employ between 3 and 199 employees. [5] Thus, the ACA’s employer mandate will only apply to relatively “larger” small businesses, firms that employ more than 50 FTE employees.
Obamacarefacts.com states that the 5.8 million small businesses in the United States that employ under 50 employees will not be penalized for not providing health coverage to their employees. However, many small businesses are providing health insurance for their employees, with 96% of firms that employ under 50 FTEs already covering full time workers. These firms, along with larger companies are paying higher premiums, as the cost of health insurance rises. If employers with fewer than 50 FTEs find themselves unable or unwilling to match the rising costs of health insurance premiums, small firms may be forced to discontinue employer-sponsored coverage.
