Studies have shown that small employers are the least likely to understand the ACA and their coverage options. Below are the top 10 questions and answers small employers have regarding the Affordable Care Act.
What is the classification of a “small employer”?
The Affordable Care Act classifies a small employer as those organizations with less than 50 full-time or full-time equivalent employees.
How do I calculate the number of full-time and/or full-time equivalent employees?
In order to figure out how many full-time or full-time equivalent employees you have, you must first average each employee’s hours based off of the most recent year (note: exclude seasonal employees that did not work more than 120 days for the year). Count those employees who averaged more than 30 hours a week (these are your full-time employees). Then take the average hours of each of the other employees that work less than 30 hours per week, add them all up and then divide by 30; this will give the number of full-time equivalent employees.
What is the “SHOP”?
The SHOP stands for Small Business Health Options Program and is a marketplace that is open to those employers with less than 50 full-time or full-time equivalent employees.
What do I need to participate in the SHOP Marketplace?
Employers looking to participate in the Small Business Health Options Program Marketplace must have the following:
- Either a business address within the state in which you are looking to buy coverage or an employee that primarily works within the state that you are looking to buy coverage.
- At least one employee that can be classified as a “common-law employee” that is not the business owner, sole proprietor, or a spouse on payroll.
- Employ 50 or fewer full-time or full-time equivalent employees.
Who could I reach out to if I need help in the SHOP Marketplace?
There are quite a few different resources for support within the SHOP Marketplace. Agents/brokers are licensed by the state to help employers and individuals enroll in insurance plans. These agents/brokers can be found online under the “find local help” section. There are also “Navigators” who are trained in helping consumers and businesses search for coverage within the Marketplace. Finally there are the call centers offering two points of contact, one for small employers and one for employees. The phone number and hours of operation can be found here.
What is the Small Business Health Care Tax Credit?
Small business owners that provide health care to employees and meet the specific qualifications are able to get a credit worth 50% of contribution of employees’ premium costs. Small businesses that are tax-exempt employers are able to claim up to 35%.
Does my organization qualify for the Small Business Health Care Tax Credit?
Those employers with less than 25 full-time or full-time equivalent employees that pay for at least 50% of your full-time or full-time equivalent employees’ premium costs. The average employee salary must be roughly $50,000 a year or less. In order to claim the tax credit, an employer must enroll in a plan through the SHOP Marketplace.
Is there a resource I can refer to for help on the Small Business Health Care Tax Credit?
There is a SHOP Tax Credit Estimator that you can use to figure out if your company qualifies as well as an estimate as to how much of a tax credit your organization could expect. Prior to using the Tax Credit Estimator, you will need a list of all full- and part-time employees, tax status, a breakdown of hours worked each week by part-time employees, wage and tax forms, and last year’s insurance premiums for health and dental.
Do I need to report anything on my employee’s Form W-2?
If you an are employer that provides a sponsored group health plan, the ACA requires you to report the cost of health care coverage on each employee’s Form W-2. This does not include the excludable portion of the employer’s contribution to health care coverage. Visit the IRS for more details on the reporting requirements.
Where can I find more information and/or resources?
Small business owners can find more information from the following sources:
- The U.S. Small Business Administration
- Internal Revenue Service
- United States Department of Labor
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