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Obamacare Small Business Quick Start Guide

Obamacare.v2Whether you’re angry, happy or just plain confused about how “Obamacare” (a.k.a. the Affordable Care Act, or ACA) will impact your business, my best advice is this: Get over it!

Official start date is January 1, 2014, but some provisions are already in place (such as healthcare tax credits for small biz) with more coming soon. Time to buck up and figure out what it means for your business, what steps you need to take and how you’re going to deal with the changes.

Many business owners and entrepreneurs are still in “wait and see” mode. That could be a mistake if you end up overpaying for existing coverage, or want to get first time coverage and face health expenses before getting your coverage in place.

Details Unfolding

Details of healthcare reform are starting to unfold. The U.S. Small Business Administration, for example, has launched a new website (SBA.gov/healthcare) and blog (sba.gov/blog) devoted exclusively to explaining it for small business. And while the SBA’s take on ACA is certainly biased to the upside, this new resource does offer a helpful gateway to information about how it will work.

Keep an eye out for something called the Small Business Health Options Program or SHOP. This program, launching in October, is designed as a (relatively) hassle-free way for you to find health insurance. If it works as promised, you’ll be able to choose the coverage level you want, what portion of employee costs you want to pay and tap available tax credits. You can sign up to receive email updates about SHOP at the HealthCare.gov website.

Starting in 2014, you or your small business can also get insurance through a new type of non-profit, consumer-run health insurer called a Consumer Operated and Oriented Plan (CO-OP). As with other co-op setups, these insurers will be run by their small business and self-employed customers themselves. Such CO-OPs are meant to offer consumer-friendly, affordable health insurance options to small businesses and must meet the same state and federal quality and financial standards as other plans. You can find more at the HealthCare.gov website.

Here are some key provisions based on the size business you are, from self-employed to 50+ employees.

Self-Employed

Health insurance coverage for the self-employed will be in place and available through a new competitive health insurance marketplace in each state no later than January 1, 2014, with open enrollment starting October 1, 2013. You’ll be able to choose from four levels of coverage that pay different percentages of your costs.

Under 25 and Under 50 Employees

One provision already in place is a tax credit (way better than a simple deduction) for small businesses with fewer than 25 employees that pay a portion of employee health premiums and meet other criteria. Right now, the credit maximum is 35% of what you pay for coverage and that will go to 50% in 2014.

Small Business Majority, an advocacy group for small business, has a handy Health Care Tax Credit calculator on it’s website. You’ll see it on the right side of the homepage at: SmallBusinessMajority.org.

Also starting in 2014, businesses with fewer than 50 employees can use the SHOP system to secure coverage. The assumption is that competitive pricing and pooled purchasing will lower costs significantly, although that’s yet to be seen.  Right now, small businesses pay about 18% more on average than big companies for equivalent coverage.

50 or More Employees

This is where mandates kick in. Starting in 2014, businesses with more than 50 full-time (defined as working 30 or more hours weekly) employees must offer health insurance or pay an “assessment.” The details of this “Employer Shared Responsibility” and other ACA tax provisions are available on the IRS website at IRS.gov. See Affordable Care Act Tax Provisions under “Hot Topics.”

Starting in 2016, businesses with up to 100 employees will be able to buy health coverage through SHOP.

Here three other helpful features available on the HealthCare.gov website:

  • Timeline for implementation: What you need to do and when.
  • State-by-state breakdown of new healthcare options for small businesses.
  • A glossary of healthcare act terminology.

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Business Owner Guide to Top Legal and Tax Trends

Starting and operating a small business is never easy, and all of the tax and rule-making authorities that get in your way don’t help. Legal and regulatory issues, trends and requirements are always changing, forcing business owners to run a new gauntlet each year.  To keep you on top of things, here are 11 trends and changes you need to know:

1. Rising unemployment insurance (UI) rates: UI funds in many states are at critically low levels. As a result, biz owners in many areas can expect to see UI contribution rates higher in 2011 to replenish depleted UI trust funds and repay federal loans taken to allow states to continue to pay benefits.

2. Changing tax laws: In 2011, business owners even greater complexity (if that’s possible), including a partial payroll tax holiday, the ability for businesses to expense 100 percent of their capital investments, and the retroactive extension of some temporary incentives that expired in 2010.

3. Health care reform: A new rule provides business tax credits for small companies that offer health insurance to employees. Grandfathering will remain an important component of health care reform. Health plans that existed on March 23, 2010 are grandfathered, meaning that they do not need to add many of the new protections under the health care reform law. To remain grandfathered, health plans cannot make any significant changes to the plan.

4. Flexible spending account (FSA) changes: Effective this year, over-the-counter medicines and drugs other than insulin (i.e., aspirin) are longer eligible for reimbursement from a health FSA unless the item is prescribed by a medical practitioner.

5. Employment law trend: The U.S. Department of Labor and many states have enacted or are considering measures to provide greater transparency to workers on the wages they are owed, especially in key areas such as minimum wage and overtime requirements, and to increase penalties on those who fail to pay their workers the compensation they are entitled.  Expect to see new rules enacted.

6. 401(k) disclosures: If your business offers a 401(k) plan, new regulations will require disclosures of fees being charged by the plan. In addition, plans offering “target date” funds will likely see further disclosure requirements around those investments.

7. States go revenue hunting: Many states are facing critical budget shortfalls, and are contemplating new tax and fee increases or filing changes to raise money. Also be aware that many state agencies are reducing staff, which could result in processing delays for businesses requiring licensing or other state services. Be sure to renew or apply for business licenses early.

8. Federal Trade Commission (FTC) requirements:  With the dramatic increase in the use of social media such as Facebook and Twitter, as well as blogs, the FTC has issued regulatory guidance around the use of advertising in social media, especially endorsements and misleading or dishonest product reviews. The agency has also recently proposed the creation of a “Do Not Track” tool for the Internet (similar to the telemarketing “Do Not Call” registry).

9. IRS enforcement: To help collect more tax revenue, the IRS is ramping up its enforcement efforts in several areas affecting small business. In 2010, the IRS kicked off an employment-tax audit program that will carry into this year and beyond. These audits are focusing on employee misclassification, executive compensation, fringe benefits, and adherence to general employment tax filing requirements.  The IRS is also accelerating efforts to increase tax compliance among employees who collect tips.

10. Privacy protection: Most states now require businesses to notify customers (and sometimes government authorities) when sensitive data is breached. Some have new laws requiring that businesses protect sensitive client data. Businesses handling protected health information are subject to additional requirements.

11. Employment verification:  U.S. Immigration and Customs Enforcement (ICE) continues to crack down on companies knowingly hiring undocumented aliens. Several different Congressional immigration reform proposals, which may present further employment verification obligations, are being considered.

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