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The Patient Protection and Affordable Care Act and what it means for your business?

With recent changes over the last couple years to Patient Protection and Affordable Care Act (PPACA), it’s vital for small businesses to understand what exactly this means and how it will affect them. Although these changes are ongoing and still fluid, knowing the details of PPACA are crucial in the determining the decisions of numerous small business owners.

 

So what exactly does PPACA mean for your business? Because the program varies for businesses of different sizes and qualifications, there isn’t a universal answer to this question. The best thing your business can do is know the facts and make your own determination of whether it’s good or bad for you. Here are some frequently asked questions we often receive.

 

Are All Businesses Required to Make Health Available to their Employees?
No. At its inception in 2014, businesses with 50 or more full-time equivalent (FTE) employees would face potential penalties for not making plans available. Businesses with under 50 employees (denoted as “small businesses”) were penalty-free.

 

What exactly are the consequences?
For large employers, if no coverage is offered to at least 95% of full-time employees (after the first 30 employees), the penalty is $2,000 per year for each full-time employee. To illustrate, if your business has 40 full-time employees and at least one employee receives a tax credit for exchange coverage, your fine will be determined by the number of employees (40) minus the exemption (the first 30) multiplied by the penalty fee, making the total $20,000.

 

What if the coverage I offer is too expensive or invaluable?
For any employee who receives a subsidy for exchange coverage, the penalty becomes $250 per month (or $3000 per year). If you do offer an affordable plan of minimal value but the employee still purchases coverage on the exchange, there is no penalty. Never can the penalty be greater than the penalty owed if no coverage was offered at all.

 

What are Safe Harbor Provisions?
Per the IRS’s guide to the PPACA, if an employer meets one of the three affordability safe harbors the coverage they offer will be deemed acceptable. These are the Form W-2 wages safe harbor (which is based on the amount of wages paid to the employee in Box 1 of the employee’s W-2), the rate of pay safe harbor (based on the employee’s rate of pay at the beginning of the coverage period), and the federal poverty line safe harbor (which treats coverage as affordable if the employee contribution doesn’t exceed 9.5% of the federal poverty line).

 

Support  for these new restrictions and guidelines does not have to be a challenge that employers take on by themselves. Business Cents can provide accurate reporting and answer questions to help ensure compliance. Our online portal tracks hours deductions and more.  If you have any questions in regards to the PPACA, be sure to contact us at Business Cents.