Now that open enrollment has ended for individuals, media attention will soon turn to the duties of business owners. The technical challenges faced in the individual rollout of the Affordable Care Act have changed the timing for the rollout of the Small Business Health Options Program (SHOP) for business owners. No matter if you employ 3 or 300 workers, this is what you should know – now.
The employer, like the individual, can select from four tiers of coverage: Bronze, Silver, Gold, or Platinum. There are two sides to the Affordable Care Act rules for business owners: what the employer chooses and what the employee chooses.
The following are stated as being the underwriting guidelines for employer eligibility in SHOP:
- Employer must offer coverage to all full-time employees working an average of 30 hours per week
- Employer must have 51% of employees residing in the primary state
- Employer must contribute a minimum of 50% to the employee’s health premium
- Employer must have a minimum employee participation of 70%
- Employer must have less than 50 Full Time Equivalent Employees in most states
Once the eligible employer selects the coverage tier, the employees can then have the option to select the insurer and/or plan of their choice. The law requires an employer contribution minimum of 50% based on the lowest cost employee-only premium in the metal tier the employer selects. The employee who selects a plan that exceeds the lowest employee-only premium may pay the additional cost in premium.
Employers who meet the following conditions may also receive an Affordable Care Act SHOP Federal Tax Credit:
- Employer must have less than 25 Full Time Equivalent Employees
- Employees must average less than $50,000 annual wages
- Employer must contribute a minimum of 50% to the employee-only health premium
- Tax Credit is available to employers for a maximum of two consecutive years.
- Owners are excluded, and should not be counted in the number of employees, wages, or premium contribution amount.
- Tax Credit equals 35% for tax year 2013 and increases to 50% for tax year 2014.
- Tax Exempt employers may qualify, tax credits equal 25% for tax year 2013 and 35% for tax year 2014.
The employer can receive the tax credit and the balance of the employer contribution can be a tax deduction. In other words, the employer may receive both a partial deduction and the tax credit.
When in doubt, contact a Certified Insurance Agent.
- Bill Catanese (email) is CEO with Open Harbor Insurance Services and has trained over 7,000 licensed insurance agents. Bill and Harvey have created a website with more information about the Affordable Care Act. When in doubt, contact a Certified Insurance Agent.
- Harvey Warren (email) is a Financial Guide with MassMutual Financial Group, a regular guest on the Hallmark Channel, and the author of Drop Debt, a consumer’s guide to getting through excessive debt. Harvey and Bill have created a website with more information about the Affordable Care Act. When in doubt, contact a Certified Insurance Agent.
 Code of Federal Regulations: Title 45, Public Welfare, Department of Health and Human Services 45 CFR Part 147
 Code of Federal Regulations: Title 45, Public Welfare, Department of Health and Human Services