How does the Affordable Care Act (Obama Care) impact my business?

October 01, 2014 By Dave Chase

I recently sat through a short summarized presentation by some trusted advisors, G&A Partners, about how we should think about the Affordable Care Act and how it impacts our clients.  While this is not meant to be all-inclusive and you should consult your CFO and insurance provider, I thought I’d summarize the questions that CEOs and entrepreneurs should be asking.

  1. Do you have less than 50 FULL-TIME EQUIVALENT employees?
    1. If so, you can breathe easy, you won’t be subject to penalties if you don’t offer insurance to you employees.
  2. Do you have less than 25 FTEs and provide insurance? If yes, you need to consider the following.
    1. If you want access to some of the small employer tax credits, you must pay at least 50% of the premiums.

For employers with 50-99 FTEs, you will be required to offer health insurance by Jan 1, 2016 or be subject to penalties.

For employers with 100+ FTEs, you will be required to offer health insurance by Jan 1, 2015 or be subject to penalties.

Note that in some cases, it may be more affordable to pay the penalty than to offer insurance.  Once again you should consult with your CFO.

However, for all companies with 50+ employees, ask yourselves the following.  Failure to comply will make your company subject to penalties:

  1. Do executives or management have a “sweeter” plan that the rest of the employees?
    1. The ACA requires all levels of employees to be offered exactly the same plans at the same rates and same company co-pays. Management perks will have to shift to other methods.  This is likely to take effect in 2016.
  2. What portion of the premium do you pay?
    1. Starting in 2015, the employee portion of the premium cannot be more than 9.5% of their gross monthly pay. Said another way, 9.5% of your lowest paid employee (assuming full-time wages) is the most you’re required to pay per employee.  It is ok to have the employee pay the remainder of any plan “upgrades” or dependent care.
  3. How long after an employee hire date must the company cover them on insurance?
    1. Some states have more stringent laws, but generally, 90 days is the limit.

These are some of the more common concerns and questions we are hearing.  Below are some additional resources if you want to dig in yourself.

Intuit (Quickbooks parent) Infographic

Healthcare.gov’s small business site

Biz Tax Law summary

obama

David Chase, Managing Partner at Advanced CFO Solutions, has experience in small to medium private companies and large public companies as a senior operational and financial leader.  With 15 years in finance, a CFO of multiple entities and divisional EVP experience, Dave has a breadth of experience.  Dave has led or been instrumental in raising multiple rounds of equity and debt in excess of $450 million.

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