The Affordable Health Care Act (also known as ObamaCare) has been called a game changer in the health insurance industry. However, most employers are not happy with it because ObamaCare has provisions that mandate them to provide health insurance to their employees (depending on the size of the company). If you’re a business owner, here’s what else you need to know about the Affordable Health Care Act.
The ObamaCare Employer Mandate says that all businesses with 100 or more full time workers have to provide health insurance to at least 70 percent of their full-time workers (and their dependents) by 2015 and 95 percent of them, by 2016. A small business with 50-99 full time employees has until 2016 to offer health insurance to its full-time workers. Companies with 49 or less full time workers are exempt from offering health insurance.
Other provisions under the ObamaCare employer mandate
Dependents
Companies are not required to insure dependents of full time workers who are over the age of 26 years. Spouses are not considered dependents.
Employee contribution
The coverage should not take more than 9.5 percent of an employees’ household income. The policy must have a minimum value of 60 percent (cost sharing by the employer). Companies that don’t want to provide coverage to their employees under ObamaCare, have to pay a fee of $2000 for every full time employee (first 30 full time employees exempt).
Businessmen who own more than one company
What if you own three companies with 25 full time employees in each? In that case, the IRS might club all employees together (in this case, it is 75) for purpose of determining whether you have to provide health insurance to your workers.
Provision does not apply to part time employees
Part time employers are not covered under ObamaCare. Note that the coverage applies to ‘full-time equivalent employees’ and not ‘full-time employees’.
Definition of full time worker
A ‘full-time worker’ is someone who works for more than 30 hours a week or more than 130 hours a month (for 120 days a year or more). However, be careful here. A company may cut a worker to part time status 11 months ago, to come under the radar. The IRS might look at the employee’s work history at the company for the last 12 months, which may attract a penalty from your side.
Critics have called the employer mandate discriminatory because it does not cover businesses who have less than 50 employees. Second, if the penalty is charged, it will be on the basis of all the full-time employees. Many people have said that this provision will discourage companies from taking on more manpower.
