If you own or manage a small business, it may be time to take another look at the Patient Protection and Affordable Care Act (ACA), instituted by President Obama in 2010. For the past several years, it is possible that your small business has not even had the need to worry about this plan, as it is likely that you have been exempt. However, several key areas of the legislature have changed for 2016, and it is very important to know exactly what this means for you and your business.
Am I Still Exempt From the ACA?
Let’s cut right to the chase: if your business employs 50 or fewer individuals, you are still completely exempt from being required to offer health care coverage, or having to pay a per-worker assessment, also known as a “pay or playâ€. Even though you aren’t explicitly required to, should you want to provide this for your employees, that is still entirely possible. You can opt to purchase a small business plan from the private market, or you can take advantage of the Small Business Health Options Plan, or SHOP exchange in your state.
On January 1st, 2016, the government’s transitional rules for what defines a small and medium-size business expired. What does this mean for you? If your business has anywhere from 50 to 99 employees, you must now provide pay or play benefits for them.
Understanding the ACA’s Criteria
Employer Shared Responsibility is absolutely mandatory in this class of business, but it is important that you take a look at what the ACA defines as a full-time, benefits receiving employee and double check your employee count against these qualifications. The ACA’s definition for a full-time employee is as follows:
– Works a minimum of 30 hours per week
-Â Works 130 hours per month
-Â Or Works a total of 1,560 hours in a yearÂ
It is important to also note that if you own multiple businesses, you will be subjected to roll-up provisions and will need to tally a cumulative number for your total employees.
New Business Classifications
Also on January 1st, the classification system for small businesses changed its naming structure. If you have 51-99 employees, you are now classified as a small group. Previously, you would have been considered a medium or mid-market group. This new classification will likely affect the rates of insurance for thousands of businesses across the nation. The Centers for Medicare and Medicaid Services issued a report in 2014 stating that in total, roughly 65% of small businesses would experience a rate increase. However, if you have a young employee base and live in a region with favorable rates, the opposite may well end up being the case for you and your business. It is important to gauge all of these factors going into this new year, and to be prepared to make changes if necessary.
The End of Grandmother Plans
Chuck Kiskaden, President and CEO of Health Benefits Advisers says, “When the ACA was first implemented, companies of all sizes were told that if they liked their plans, they could keep them. But all grandmother plans end with Jan. 1, 2016 and later renewals, and companies will need to transition to an ACA-defined bronze, silver, gold or platinum plan.†This process was also known as “Grandmotheringâ€.
Is your small business ready for the changes that were implemented at the turn of the year? Take a look at your options, consult with your employees and come up with a plan that will work for everyone in 2016 and beyond.