Obamacare – Small Business


Government Releases Final Rule on Small Business Health Tax Credit

The Internal Revenue Service released a final rule on the Small Business Health Tax Credit. The final rule generally adopts the language from the proposed rule.

Please keep in mind that small employers interested in the Small Business Health Care Tax Credit have to enroll in a Small Business Health Options Program (SHOP) plan (and meet other eligibility requirements) in order to qualify.

The Small Business Health Care Tax Credit is available to eligible small businesses and small tax-exempt employers for two consecutive tax years. For small businesses, the maximum tax credit is 50 percent of premiums paid; for tax-exempt employers, the maximum is 35 percent of premiums paid.

Small employers may qualify for the tax credit if they employ fewer than 25 full-time equivalent employees with an average annual wage of $50,000 or less. The tax credit amount is phased down for employers with between 11 and 25 full-time employees and average annual wages between $25,000 and $50,000.

Employers planning to claim the Small Business Health Care Tax Credit have to obtain an official eligibility determination notice from the federal government. Employers should call their financial advisers for additional information.

Like our other small group products, SHOP plans offer comprehensive coverage, from doctors to medications to hospital visits. Employers can compare options based on price, benefits and other features that may be important to their employees. Plans offered through SHOP have to meet all 2014 health market reform requirements mandated by the Affordable Care Act.

We are currently reviewing the rule and will provide more information once it is available.

I have between 2 and 49 employee’s, what should I expect?

With a business of this size you are not obligated to purchase insurance for your employees. There are subsidies available to assist you in purchasing insurance for them.  You can find a tax credit calculator at the Small Business Majority.  The tax credits are larger for the fewer amount of people you employ and the lower their wage scale.

Your employees though will still be required to purchase health insurance or face a tax penalty at the end of the year.  Many studies have shown that the stronger the economy gets the more likely an employee is to leave his current position that doesn’t include a comprehensive benefits package (including medical).  There may be some alternatives with HRA’s starting in 2014 that will allow an employer to assist their employees while at the same time keeping costs down, but we are still waiting for additional federal regulations on this.  It should be a conversation you can have with your broker to examine these options, or you can Contact Us at any time so that we can do a comprehensive evaluation of your options for you.

Part of the healthcare law requires businesses that sell over $500,000 per annum of products or services to “inform” their employees of the new market place.  You can do this, and we would suggest documenting this, by using the following Department of Labor Forms:



What if I have a plan in place, what is going to change?

Starting in 2015 (this has been delayed 1 year) you will have options through the new SHOP Exchange.  This federal exchange will give business owners new options and allow them to pool their groups with other small businesses.  Currently the smaller your group and the older your demographic then the higher your typical small group plans will be.  We anticipate that the smaller your group the more cost effective these new plans will be for you.

One major difference will be new plan options moving forward.  Parts of the law create restrictions on plan year deductibles for small group plans.  One part of the law restricts this to $2000 for individual and $4000 per family.  We are waiting for the release of new plans to get more detail on what types of insurance plans that will be offered, but we don’t anticipate that some of the higher deductible plans that are in place today will be compliant as of next year.


How do I enroll in coverage through the SHOP Marketplace?

You enroll in SHOP coverage directly through an agent, broker, or insurance company.

Work with an agent, broker or insurance company to help you apply for SHOP eligibility and find and compare available SHOP plans. You can also use the premium estimation tool on HealthCare.gov to browse and compare plans and pricing information.

Your agent, broker, or insurance company will help enroll you and your employees. You don’t need to wait for SHOP eligibility confirmation to enroll.  The deadline to enroll is always the 15th of the month for coverage to be effective the 1st of the following month.

Starting in 2014, small employers can claim the Small Business Health Care Tax Credit only for coverage purchased through the SHOP Marketplace.