Preparing Small Businesses For The Changes To The ACA In 2016
With recent tweaks to the Patient Protection and Affordable Care Act recently enacted, small business owners need to be aware of the changes in case they find themselves in a position where they need a working capital loan. The PPACA has caused a stir in both D.C. and in local politics, with many people staking out their side for or against the controversial law. Despite the furor, though, it remains the law of the land, and it contains regulations and mandates that small business owners need to pay attention to.
Tweaking the ACA
Originally, Obamacare defined a small business as any enterprise with 50 employees or fewer. Under the previous language in the bill, starting in 2016, the definition of small business would have expanded to include any with one to 100 employees.
However, in early October, President Barack Obama signed into law the Protecting Affordable Coverage for Employees Act, which was overwhelmingly approved by both chambers of Congress. The PACE Act amends the original PPACA so that only those companies with one to 50 employees constitute small businesses, ultimately protecting small businesses with between 51 and 100 employees from higher premiums and more onerous mandates and compliance that exists in the small-group market.
National Association of Healthcare Underwriters Vice President of Government Relations Marcy Buckner hailed the move as a major step in the right direction for alleviating extraneous burdens on smaller to medium-sized businesses, Benefits Pro reported.
“To have [businesses with 51 to 100 employees] added into the small group market was going to cause a big increase in premiums,” said Buckner. “We were part of a coalition with groups like ourselves and carriers. Oftentimes, the carriers and agents aren’t on the same page, but we worked well on this. It was a great success.”
Allowing states to choose
While the PACE Act amends the definition of what constitutes a small business, the bill also leaves it up to the individual states to retain the current rule, which would expand small businesses to those with 51 to 100 employees. The Act allows any state to make the election to maintain the original definition via any state action within the authority of the applicable state regulatory agency in charge legally binding health insurance issuers. If a state opts to elect the original small business definition of 51 to 100, then the governing body must uniformly apply the same standards to all the state’s health insurance issuers. This includes any operating within the Small Business Health Options Program.
As Benefits Pro noted, states like New York are planning on maintaining the 100-employee threshold. Small business owners must check with their state’s local governing authority to determine whether they fall under the purview of the original definition or the amended one.
Small business owners need to prepare
While the passage of the PACE Act greatly alleviates many of the additional burdens and compliance issues many small businesses would end up facing at the beginning of the year, some companies have already begun the process under the assumption that the ACA would have impacted their employees’ health insurance benefits.
In addition, beginning in 2016, employees who do not purchase health insurance will face a steeper penalty, either $695 or 2.5 percent of any income over $10,000. Owners should take the time to educate their staff on the potential penalties associated with opting not to purchase insurance.
Further, once February comes around, small business owners will face another host of compliance issues, with the government requiring benefit professionals to collect and file more information. Complying will mean employers will have to spend a significant amount of time filling and filing forms. According to Benefits Pro, if small business owners opt instead to utilize an outside vendor to complete this process, it could potentially cost anywhere from $6,000 to $8,000 to implement and administer the forms.