The new year is in full swing, but some small-business owners are still not quite certain about what 2014 means in terms of new healthcare regulations. The fact that the new regulations have continued to be a lightning rod for controversy since their inception has muddied the waters considerably, and created lingering uncertainties about what, exactly the new regulations mean for small-business owners. Here’s a rundown of the most notable changes that took effect on January 1st, just to clear up any misconceptions about the Affordable Care Act’s implications for 2014.
The Health Insurance Tax
The purpose of the new health insurance tax is to finance the overhaul of the healthcare system, which will provide insurance for uninsured or under-insured individuals. While the tax is actually levied against health insurance providers based on their share of the “fully-insured” market, many have made it clear that they intend to pass these new expenses on to those purchasing insurance in that market, which happens to include the majority of small businesses. Most large employers typically fall into the “self-insured” category, so they’ll be exempt from this tax. Experts are predicting that these costs will raise rates for smaller employers by as much as 3%.
The Employer Mandate
This controversial provision requires firms with 50 or more employees to provide affordable health insurance or pay substantial penalties. The Obama administration has delayed the implementation of this rule until 2015, so businesses still have time to reach compliance before facing fines. It’s also important to note that less than 4% of all businesses in the US will be affected by the employer mandate, and that most businesses that stand to be affected already provide insurance.
Industry, History, Gender Are No Longer Factors
When calculating a business’s health insurance premiums, insurance companies take a number of factors into account. These factors used to include the business’s claims history, industry, and gender and existing conditions of the business’s employees. But for firms with 50 workers or fewer, insurers are no longer allowed to take these factors into account.
Small-Business Healthcare Tax Credit Increases
From 2011 through 2013, the maximum percentage small businesses could deduct for employer-paid health insurance premiums was 35%. This year, that figure has jumped to 50%, which should save small businesses (those with fewer than 50 employees) a substantial amount of money. In order to qualify for this tax credit, small businesses must purchase their health insurance plans through the government-sanctioned small-business health insurance exchanges.