7 Things Business Owners and Their CPA’s Need to Know About Obamacare NOW
As the principal of an employee benefits firm, I work closely with small businesses and am often approached by accountants and clients who are concerned with how the Affordable Care Act will impact them.
I have synthesized the most important questions clients have asked which are below:
1. Can owners/executives still have plans separate from everyone else?
While the Affordable Care Act dictates that companies cannot offer richer plans favoring highly compensated employees only, guidance has not yet been provided resulting in a delay through 2014 and likely through 2015. Once guidance is provided, companies will likely offer base and buy-up plans to everyone with identical employer contributions. This will avoid discrimination penalties. By increasing the executives cash compensation to offset the cost of the buy-up plan, highly compensated individuals will be able to continue unaffected.
2. How does Obamacare impact me?
Small Business Owner with less than 51 employees
- Every single plan in NY will change upon its renewal. Some plans will even change what doctors are in-network and what prescriptions are covered. It’s important that you start shopping early so that the proper analysis can be completed.
- You are not required to provide health insurance coverage to your employees.
- If you provide coverage to employees that is affordable and meets minimum value standard, your employee is not eligible for a subsidy in the exchange.
Small Business Owner with 51 to 99 employees
- 2014: You are not required to provide affordable or minimum value coverage to employees.
- 2015: If you do not offer full time employees coverage that is affordable and minimum value, you will be subject to a $2,000 fine for each employee (except for the first thirty). If you provide coverage that is minimum value but not affordable, you will be fined $3,000 for every employee that successfully obtains a subsidy in the exchange.
Large Business Owner with 100+ employees
- 2014: You are required to provide affordable or minimum value coverage. Failure to do so will result in the penalties listed above.
3. Mom & Pop Shop: Am I still eligible for a small group plan?
To qualify to have a small group health plan, which typically offer richer benefits than available in the individual market, you will need to have at least one non spousal employee. Therefore, mom and pop shops that are comprised of just a husband and wife will have to obtain coverage in the individual market.
4. How is Obamacare a new tax law?
15,000 new IRS agents have been hired to help generate tax revenue though the Affordable Care Act. This includes the individual mandate, the employer shared responsibility provision, and fines for non-compliance such as not having e a section 125 plan. Additional information can be found here.
5. How can I reduce costs?
Look at reviewing and shopping all of the employee benefit programs like dental and long term disability. In doing just that, a client recently lowered their annual dental insurance premium by just over $13,000/year. The network of dentists with the new carrier was similar along with the underlying coverage..
6. Is a PEO the answer to lowering our healthcare costs?
If your client is considering a PEO, make sure you get involved in the process. Many PEO’s have hidden administration fees that can easily be uncovered with some careful analysis. Your diligence will serve them well.
7. If I have over 51 employees, can I set up multiple entities so that I’m not subject to the Employer Shared Responsibility Provision?
Control groups, which are several entities with common ownership, are combined when determining the number of full time equivalents. Splitting up a large group will not shield an employer from the requirement. Other strategies, which are available, will need to be implemented to reduce the employer burden below the $2,000.00 penalty per employee.
The health insurance marketplace in 2014 is experiencing only the beginning of the changes to come. As time goes on there will be new changes, costs, and challenges which you can help to navigate your clients through. Preparing a carefully designed benefits package that provides efficiency to the company and can be used to attract the best personnel, is an investment every growth driven company should be looking to implement.