How does The Patient Protection and Affordable Care Act of 2010 affect your business? It depends upon the number of employees you have. Businesses with less than 50 employees are not required to provide healthcare coverage to their employees. However, if your business has fewer than 25 employees, and you choose to provide insurance for those employees, you may be eligible for a credit of up to 50% of the cost of the premiums you paid.
If your business has 50 or more employees, the law mandates that if you do not provide affordable health insurance, then you will be assessed a penalty. For business with 50 to 99 employees, the mandate is effective beginning January 1, 2016. If your business has 100 or more employees, the effective date for the mandate to cover 70% of the employees is January 1, 2015 and the effective date for covering 95% of the employees is January 1, 2016.
The number of employees that dictate how the law affects your business is calculated based on full time equivalent employees. An employee that works at least 30 hours per week in any month is counted as a one full time employee. Part time employees are calculated by dividing the hours worked by all part time employees in a week by 30. The sum of full time employees and part time employees is the number of full time equivalent employees. Seasonal employees who work no more than 120 days per year are not included in full time equivalents, nor are business owners and family members.
The insurance provided by large employers must be “affordable” and have “essential health benefits” as outlined by HHS. To be affordable the insurance provided must cover 60% of covered health care expenses and the employee’s cost for the insurance cannot be more than 9.5% of his/her family income. The penalty for large businesses that do not provide affordable health insurance to their employees is $2000 per full time employee (not full time equivalent) less 30 employees.