Health Care Reform and Small Businesses

7/3/2012 - By Lisa Fairbanks

The Supreme Court has upheld the constitutionality of the 2010 health care reform legislation, but what does that mean for small businesses? What is the employers “shared responsibility” or the “employer mandate”? First, the employer mandate only applies to “large employers” with 50 or more full time employees. Full time meaning employed on average 30 hours per week. Second, it only applies to these employers with who either do not offer full time employees the opportunity to enroll in minimum essential coverage under an employer-sponsored plan, or offers a health plan that is unaffordable or does not provide minimum value.

For small businesses with less than 50 full time employees there is little “required” change from this health care law. Small employers, as part of the health care reform, with 25 or fewer full time equivalent employees are eligible for the Health Insurance Tax Credit. This credit is up to 35% (25% for tax exempt organizations) of the health insurance premiums paid by the employer. The credit is scheduled to increase to 50% (35% for tax exempts) in 2014. However, along with the increase in credit, the employer must participate in a health care exchange to be created as part of the health reform. The Supreme Court ruling has given the states the option to “opt out” of building health care insurance exchanges. In a recent statement, Governor Rick Scott said Florida would opt out of building an insurance exchange. We will have to “stay tuned” to see what happens next.

Lisa Fairbanks, CPA

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