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""{{BlogPost|Has title=The Affordable Care Act and Small Business""|Has author=Meghana Gaur|Has content status=Tabled|Has Graphics status=None|Has processing notes=Tabled pending further information about possible ACA replacement.}}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 coveragereforms to increase the quality, affordability , and accessibility of insurance, the financing on medical care, coverage and the operation of the Medicare programexpand Medicaid.” [1https://www.cbo.gov/topics/health-care/affordable-care-act]

Whether a “small business” small business will be directly penalized affected 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 affects only small businesses with greater more 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). [2]

Under the ACA’s employer shared responsibility provisions, these Applicably Large Employers (ALEsALE) 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]

Employer Shared Responsibility provisions apply If a firm fails to provide health insurance to employers that employed 50 or more 95 percent of its full-time equivalent employees during and their dependents, the previous calendar year. HHS Fullbusiness must make an employer shared responsibility payment of $2,000 (indexed for future years) for each full-time employees are considered those who work on average employee beyond the first 30 hours or more a week for more than 120 days in a year, while part-time employees are those who work on average less than 30 hours per weekto the IRS. Furthermore, but firms that employ more than 120 days per year. To find the total number of full-time equivalent employees50 workers must contribute, at a minimum, the aggregate number 60 percent of hours worked by part-time employees should be divided by 30 and added the the number of full-time cost for employees' coverage. [4https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions]

It is important Employer Shared Responsibility provisions apply to note employers that many small businesses are not subject to ACA requirementsemployed 50 or more FTE employees during the previous calendar year. Deutsche Bank Global Markets Research Census data from 2010 and 2012 reveals that an overwhelming majority of U[http://www.Shhs. firms employ fewer gov/healthcare/] FTE employees are those who work on average 30 hours or more a week for more than 20 120 days in a year. Part-time employeesare considered those who work on average less than 30 hours per week, as firm size in but more than 120 days per year. The number of FTE employees can be found by totaling the U.S. (aggregated number of workers employed hours worked by American businesses) follows a fatpart-tailed distribution. Therefore, most small businesses are not subject to time employees divided by 30 with the ACA’s employeraggregated number of hours worked by full-sponsored insurance mandatetime employees. [https://www.healthcare.gov/shop-calculators-fte/]

Fims Most small businesses are not subject to ACA requirements. Deutsche Bank Global Markets Research Census data from 2010 and 2012 shows that an overwhelming majority of U.S. firms employ fewer than 20 employees, as firm size in the U.S. (number of workers employed by American businesses) follows a skewed distribution. A majority of businesses actually employ fewer employees than the average firm size. Firms with over 500 employees, however, employ the greatest share of the workforce and contribute the most toward total employment jobs in our economy. [5http://www.businessinsider.com/us-employment-by-firm-size-has-a-fat-tailed-distribution-2015-6%5D]

The biggest complaint about the ACA concerns the trend of rising premiums. The Congressional Budget Office (CBO) has found that while “premiums premiums for private insurance have grown relatively slowly in recent years, they have usually grown faster than” than average income and the economy as a whole. From 2005 to 2014, premiums for employment-based insurance increased by 48 percent for single coverage plans and by 55 percent for family coverage. What’s more, the CBO and Joint Taxation Committee (JCTJTC) forecast premiums to increase at a comparable growth rate for the next ten years, averaging roughly two percentage points faster than per capita GDP annually.[https://www.cbo.gov/publication/51130]

Whether this increase the ACA is due primarily to the ACA blame for premium hikes is another story. The CBO points out that while many of the ACA’s regulations increase premiumscosts, the spike has been more apparent in the nongroup non-group market. For example, in selling policies, insurers must now “accept all applicants during specified open-enrollment periods” and limit their reliance on age in determining rates. Additionally, the ACA disallows carriers from evaluating premiums on the basis of health and restricting coverage for preexisting health conditions. Finally, insurers “must cover specified categories of health care services” and pay at least 60 percent of the costs associated with those services. The CBO CBO’s report claims that these aforementioned regulations “increased increased premiums noticeably in the nongroup non-group market,” while but effects on other markets experienced were more “limited effectslimited.” [6https://www.cbo.gov/publication/51130]

Although The SHOP (Small Business Health Options Program) Exchange, created by the ACA, provides another option for small businesses that employ with fewer than 50 full-time FTE employees are not required . SHOP utilizes group plans and tax credits to provide health insurance offer lower healthcare costs and increased employer choice functions, by enabling employers to their employees under choose from a larger pool of available coverage options. [http://digital.library.unt.edu/ark:/67531/metadc501935/m1/1/high_res_d/R43181_2015Jan15.pdf]  The exchange grants small businesses with increased buying power in the ACA, many do. These group-plan market - an advantage usually enjoyed by larger firms will find themselves paying higher premiums as - and provides a simple mechanism for small businesses to compare the cost price, coverage, and quality of health plans. Small businesses that purchase insurance continues through the SHOP exchange and employ fewer than 25 FTE employees may also be eligible for the Small Business Healthcare Tax Credit. [https://www.healthcare.gov/small-businesses/provide-shop-coverage/shop-marketplace-overview/] The requirements for a small business to risequalify for the small business tax credit can be found [https://www.healthcare. If gov/small -businesses/provide-shop-coverage/small-business-tax-credits/ here]. The tax credit can be worth up to 50 percent of a business’s contribution toward its employees' premium costs (up to 35 percent for tax-exempt employers are unable ), depending on the firm’s number of employees and wages. The tax credit is highest for small businesses that employ fewer than 10 employees, with average annual salaries of $25,000 or unwilling to pay less; as Healthcare.gov states, the “smaller the health premiumsbusiness, they may be forced to discontinue their employerthe bigger the credit.” [https://www.healthcare.gov/small-businesses/provide-shop-sponsored healthcare coverage/small-business-tax-credits/] ==How has the ACA affected small business hiring practices?==The more readily available effects of the ACA on small businesses are on employees. Some small businesses report slowing or halting their hiring practices and cutting employees’ hours. In 2012, two years after the introduction of the ACA, Gallup and consequently, some workers might seek other employment to gain access Wells Fargo conducted a survey of 600 small business owners. The survey revealed that 48 percent of small business owners pointed to "potential healthcare costs" as a reason for not hiring more employees.[http://www.gallup.com/poll/152654/health coverage-costs-gov-regulations-curb-small-business-hiring.aspx]

Small businesses that employ greater According to another survey conducted by the Society for Human Resource Management of more than 600 small business owners, more than 50 employees can avoid paying four out of ten small business owners have delayed hiring due to uncertainty about the increased costs effects of insurance coveragethe ACA. Alternatives include increasing employees’ deductibles, negotiating private insurance plan prices or switching from a group plan to individual employer-sponsored options, such as Health Savings Accounts (HSA), Health Reimbursement Accounts (HRA), or direct primary careOne in five small business owners reported that they have cut their number of employees. [7http://www.ncpa.org/pub/st356]

The SHOP (Small Business Health Options Program) ExchangeFor small businesses that are nearing the 50th FTE mark, created by the ACA51st hire evidently presents a large marginal cost to the firm. Specifically, provides another option for small businesses with fewer than firms that employ 50 FTE employees to purchase or more affordable insurance. SHOP utilizes group plans FTEs and tax credits refuse to offer lower healthcare costs and increased employer choice functions, by enabling employers to choose from provide qualified health insurance coverage must pay a larger pool tax penalty of available coverage options$2,000 for each uninsured employee beyond the first 30 employees. [8] The exchange grants small businesses with This increased buying power in the group-plan market - an advantage usually enjoyed by larger firms - and provides marginal cost serves as a simple mechanism reason for small businesses to compare why many critics believe that the priceACA is “killing jobs.” However, coverage, and quality of plans.[9] Small the government delayed penalties for small businesses that purchase insurance through the SHOP exchange employed between 50 and employ fewer than 25 FTE 99 employees may also until 2016, as a transitional relief from the employer mandate. In 2016, these small businesses will be eligible for the Small Business Healthcare Tax Creditfirst time subjected to the burden of the ACA’s employer mandates.

The requirements for a Going forward, these small business owners may be forced to qualify purchase insurance coverage for the small business tax credit can be found here. The tax credit can be worth their employees from a market that continues to hike up to 50 percent of a business’s contribution toward its employees' premium costs (up to 35 percent for taxrates. While the long-exempt employers)term effects of the Affordable Care Act on small businesses remain largely unknown, depending on the firm’s number of employees policymakers should adopt prudent and wages. The tax credit is the highest necessary measures in order to mitigate increased healthcare costs for small businesses that employ fewer than 10 employees, with average annual salaries of $25,000 or less. “The smaller the business, the bigger the credit.” [10]

==How has the ACA affected small business hiring practices?Link to Google Doc==The visible effects of the ACA on small businesses, if any yet, are mostly being felt by employees, as some businesses are slowing or halting their hiring practices and cutting employees’ hours. In 2012, two years after the introduction of the ACA, Gallup and Wells Fargo conducted a survey of 600 small business owners. The survey revealed that 48 percent of small business owners pointed to "potential healthcare costs" as a reason for not hiring more employees.[11] According to another survey conducted by the Society for Human Resource Management of more than 600 small business owners, more than four out of ten small business owners have delayed hiring due to uncertainty about the effects of the ACA, and one in five small business owners reported that they have cut their number of employees.[12]

For small businesses that are nearing the 50th FTE mark, the 51st hire presents a large marginal cost to the firmhttps://docs. Firms that employ 50 or more FTEs and refuse to provide qualified health insurance coverage must pay a tax penalty of $2,000 for each uninsured employee beyond the first 30 employees. Furthermore, firms that employ more than 50 workers must contribute, at a minimum, 60 percent of the cost for employees' coverage. [13] This increased marginal cost for the 50th employee serves as a reason why many critics of the ACA believe that the ACA is “killing jobs” and also why many small business owners have concerns about expanding their businesses. However, regulators delayed penalties against firms who employ between 50 and 99 employees until 2016 as a transitional relief to small businesses from the employer mandategoogle.com/document/d/1ixVOtmSLhj_1J76ngWSoRIphzx1GCxvZX9ttfvEeK_o/edit