Are you an owner of a small business wondering what is in actually in the healthcare act?
The following are some things your business must first consider when trying to figure out how the Affordable Care Act (ACA) will impact your situation. The time to act is now because the ACA has placed increased responsibility on certain employers to “pay or play” when it comes to offering employees health insurance. Are you confused yet?
Your Obamacare summary begins now.
30 is the New 40
An important detail for employers to understand is how a full-time employee is classified under the ACA. In the U.S., the 40-hour week has long been thought of as the standard for full-time, but not anymore. The answer that matters is a full-timer who works an average 30 or more hours per week over a period of 90 days is considered a full-time equivalent. A part-timer is one who works less than 30.
Elementary Math for $200, Alex
The number of full-time employees a business has is the determining factor of whether it is an applicable large employer (ALE) or not. In addition to counting full-timers, businesses will be required to use the following formula to determine how the hours worked by part-timers will be counted to determine the total number of full-time equivalents (FTEs) working. Divide the total part-time hours paid per month by 120. Add that number to the number of full-timers and this gives the total number of FTEs.
Businesses with 50 or more FTEs are required to offer a qualified health insurance plan to all of their full-timers or face penalties. Remember, part-timers and their hours worked count toward determining whether a business is an applicable large employer or not, but if an ALE does not offer coverage, the penalty calculation is $2,000 per year multiplied by the total number of full-timers, minus the first 30. This penalty is called the ‘sledgehammer.’
If an ALE offers insurance, but one or more full-timers decides instead to purchase coverage through the federal Marketplace, the penalty is the lesser of (1) $3,000 per year for each employee entering the Marketplace, or (2) the calculation for not offering coverage at all. That penalty is called the ‘pickaxe.’ These are some of the facts of Obamacare causing the most heartburn amongst small businesses. Uncertainty is difficult for any business but it goes away with education and a free way to educate yourself is to continue to check back to HealthReformExplained.com during this volatile implementation period.