What steps should you take today? Start getting up to speed on the opportunities and requirements of the new law.
“Now is the time to get some education,” Nowicki says. “Meet with your broker or health insurance advisor and learn what’s coming down the pike from the perspectives of benefits and taxes.”
Employers need to look at their current health insurance plans and make the necessary changes to be in compliance. Then communicate these changes to employees, and revise the plan descriptions and handbooks.
The decision on whether to continue or drop coverage altogether will need to be made before the end of 2013. The so-called “play or pay” provision will activate in 2014. That means employers with over 50 employees must either offer health insurance with minimum requirements or pay a fine.
“It's not too early to look at this area,” Stich says. You'll need to determine if your organization falls over the 50-employee threshold. That can be more difficult than it seems. You'll need to calculate how many casual, part-time and seasonal individuals fall into the category of “full-time equivalent” employees.
As you tackle the vagaries of the ACA, remember that the law is a work in progress. The federal government will continue to issue regulations that interpret the law for real-world operations. State governments will jockey to set up exchanges of various kinds, or opt to let the federal government do the job. Finally, organizations competing for your employees may or may not set up attractive health insurance programs.
Perhaps the only thing certain is that change is on the way. Now is the time to get a handle on how the marketplace is changing, then design a health insurance program that maximizes employee satisfaction while minimizing cost.
Figuring the tax credit
Do you have 25 or fewer fulltime employees? Are their average annual wages less than $50,000? Do you contribute more than 50% of your employee’s total premium costs?
If the answers are “yes,” you may be eligible for assistance with your health insurance premiums under the ACA. You may be entitled to a tax credit of up to 35% of your contribution toward your employee’s health insurance for this tax year. The credit will increase to up to 50% for tax year 2014 and 2015.
For 2013, the full tax credit is available to employers with 10 or fewer employees whose average annual wages are $25,000 or less. The tax credit gradually scales down as workforce size and average wage increase.
Here’s an example. Suppose your business employs 10 full-time workers and the average wages are $25,000. If your annual employer health care costs are $70,000, you're entitled to a $24,500 credit in 2013, and $35,000 in 2014.
For help on calculating your credit, visit www.irs.gov. Click on “Affordable Care Act Tax Provisions” then see “Small Business Health Care Tax Credit.” Or visit www.smallbusinessmajority.org and go to “Healthcare Tax Credit” in the upper right hand corner. Click on “Go to Calculator.”
For more information on the Affordable Care Act, check these resources:
- The U.S. Department of Health and Human Services
- The Kaiser Family Foundation
- The Small Business Administration
Phillip Perry is a New York-based freelance writer on business topics.