What the Health Care Reform Means for Your Small Business

Small businesses are extremely disadvantaged currently in regards to the U.S health care system in comparison to large businesses and their counterparts and are an important entity on the U.S economy. With the new Health Care Reform taking effect what will that mean for small businesses now and in 2014? Below are some pros and cons you can expect to see in the next few years.

It’s important to define what a small business is before you can determine whether these changes will benefit or affect you. A small business is defined as fewer than 100 employees or in some cases fewer than 50 employees depending on the state. Companies with 10 employees or less will benefit the most by receiving the highest tax credit if the employee wages are low.

Starting this year:

1. Very Small Companies: If you have a 10 employee company or less with an average salary of less than $25,000 you can get a 35% tax credit.


2. Small Companies: If you have a 25 employee company or less with an average salary of less than $50,000 you can qualify for a smaller tax credit.


3. No Tax Credit: If you have more than a 25 employee company and/or an employee that earns more the $80,000.

Starting in 2014:

1. SHOP (Small Business Health Options Programs) Exchanges: Small companies will be able to set up health insurance pools which will allow small companies to group together to purchase health insurance.


2. Very Small Companies: If you have a 10 employee company or less with an average salary of less than $25,000 you can get a 50% tax credit.


3. Penalized: If you have a company with 50 employees or more you will be penalized $750 per full-time employee if you don’t provide health care insurance, excluding the first 30 employees you don’t cover. This does not affect companies with fewer than 50 employees.


4. Additional Fines: If you do not cover 60% of your employees health costs overall and government-defined set of services you will receive additional fines.


5. Higher Premiums: If you pay more than $10,200 per year for health insurance for your individual employees, or more than $27,500 for your employees with family coverag, the insurer will get charged by the government a 40% excise on the portions you pay, which means higher premiums for you and/or your employees.


6. Coverage: If you offer your employees health care you must cover no less than 72.5% of the cheapest health plan. If your employees have a family plan you must cover no less that 65%.


7. No coverage: If you choose to not cover your employee’s health care you must pay 8% of the average wages defined in a certain period to the SHOP exchange Commissioner. You are fined a $100 per violation day if you do not pay your SHOP fee. (The penalty for not providing insurance will increase to $2,000).

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