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The Affordable Care Act and Small Business (view source)
Revision as of 17:18, 19 October 2016
, 17:18, 19 October 2016no edit summary
The Patient Protection and Affordable Care Act was passed by Congress and signed into law by President Obama on March 23, 2010. Together, the Health Care and Education Reconciliation Act of 2010 and the Affordable Care Act (ACA) transformed the existing healthcare system in the United States by instituting changes that affected “insurance coverage, affordability and accessibility of insurance, the financing on medical care, and the operation of the Medicare program.” [1https://www.cbo.gov/topics/health-care/affordable-care-act]
==Which Small Businesses Are Affected by the ACA?==
Whether a “small business” will be directly penalized by ACA mandates depends strictly on its size. While the Small Business Administration's (SBA) Office of Advocacy defines a small business as any independent business that employs fewer than 500 employees (for a more detailed description of SBA’s small business classifications by industry and sector see [https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/summary-size-standards-industry-sector SBA guidelines]), the ACA mandates that businesses with greater than 50 full-time employees to provide health insurance. Small firms employing fewer than 50 full-time employees constitute an overwhelming majority of small businesses and are exempt from the employer mandate (also known as the Employer Shared Responsibility Payment or "Play or Pay" penalty). [2http://payroll.intuit.com/support/kb/2001632.html]
Under the ACA’s employer shared responsibility provisions, these Applicably Large Employers (ALE) employing 50 or more full-time equivalent (FTE) employees are required to offer “affordable” minimum essential coverage that provides “minimum value” to their employees and their dependents. If an ALE fails to provide health insurance to 95 percent of its full-time employees and their dependents, the business must make an employer shared responsibility payment, of $2,000 (indexed for future years) for each full-time employee beyond the first 30 employees, to the IRS.[3]
