As mentioned on Facebook, I recently attended a seminar on the Patient Protection and Affordable Care Act (PPACA) and how it affects businesses. While the seminar offered information on businesses of all sizes, this post will deal primarily with small businesses.
PPACA was signed into law in March 23, 2010. It has multiple provisions that are phased in beginning in immediately until 2020. Immediately after passage, multiple groups began attempts to fight the legislation, including through the court system. At this time, the results of some of these attempts have made it through levels of the court system, including the National Federation of Independent Business v. Sebelius, which was heard by the United States Supreme Court and decided in June of 2012.
PPACA breaks companies up into three main categories. The first is self-employed individuals – those who are self-employed and have no employees. The second is small businesses – businesses with less than 50 full time employees. The third is large businesses – businesses with 50 or more full time employees.
Self-employed individuals have two options for health insurance under the law. Regarding insurance, self-employed individuals can buy either small business plans or individual plans depending on what is offered in the state. Self-employed individuals can also choose to be uninsured and pay a tax for failure to purchase insurance.
Small businesses are not required to provide health insurance for their employees. In some instances, small businesses can get tax credits if they choose to purchase insurance for their employees. Starting in 2014, small businesses can also purchase plans for their businesses through insurance exchanges, with the idea that the plans will be similar in costs to group plans offered by large employers. (Of course, this is in theory as exchanges are not currently up and running.) However, if a small business crosses from being a small business to a large business (hiring that 51st person), then new regulations come into play, including requiring the business to offer health insurance or pay large fines.
So, where does this leave the small business? Small businesses that didn’t have any insurance advisor now need someone in their rolodex (or the more 21st century version address book online). Prior to bringing on any new employees, and especially one that will increase the number employed by a business to 51 (which may include owners in some instances), small business owners must talk to their insurance agent and CPA to determine if PPACA makes hiring someone else a small financial burden or a huge one.
If you have questions about PPACA or need a referral to an insurance agent that works with small businesses, contact me, Elizabeth Lewis, your small business lawyer, today at 720-258-6647 or by email at Elizabeth.Lewis@eclewis.com.