Healthcare Reform and Small Businesses

The Healthcare reform has provisions for Americans as well as businesses. The Healthcare reform affects small businesses that have fewer than 100 employees but depends on state guidelines.

Tax credits are available to small companies depending on the size of the company. The largest tax credits are available for small businesses for that have 10 employees or less. Companies with 50 employees or more will not receive any tax credits. Companies who provide their employees with high cost insurance plans that is defined by the cost of the insurance premiums instead of what the insurance plan covers will be taxed at 40% beginning in 2014. Subscribers of these plans usually have excellent health coverage and low deductibles.

Starting in 2010 small businesses will receive a 35% tax credit if they have 10 employees or less that earn $25,000 a year. Small businesses that have 25 or less employees than earn $50,000 a year or less are eligible for a smaller tax credit. Employees who earn $80,000 or more per year are excluded from the tax credit.

Beginning in 2014, all states must setup health insurance pools called Small Business Health Options Programs (SHOP) which will allow small businesses to pool together to buy health insurance. Participating in this program will allow small businesses to receive a 50% tax credit if you have 10 or less employees who earn less than $25,000 a year. If you have 50 or more employees and do not provide health insurance you will be fined $750 per full-time employee but you will not be charged for the first 30 workers that you don't provide health insurance for. You will also be fined if you don't cover at least 60% of employee health costs.

Small companies that pay more than $10,200 per year for individual employee’s health coverage, or more than $27,500 for family health coverage will be charged a 40% excise tax on the portion of money paid that exceeds the individual or family amounts.

If you offer your employees health insurance you are required to cover no less than 72.5% of the cheapest health insurance plan for individuals, and no less than 65% of the cheapest plan for families. You will be required to automatically enroll every employee in a health plan with the lowest employee premium, unless they opt out.

If you decide not to provide health coverage to your employees you will be required to pay the Health Choices Commissioner 8% of the average wages paid during a predetermined enrollment period and you may be charged a lower percentage if your annual payroll is less than $400,000.

If you provide health insurance to your employees and don't pay the SHOP fee or if you try to entice a sick employee away from the company-provided health insurance towards the SHOP to save money you will be fined $100 per violation per day.