Effective, 1/1/15, if your business employs fewer than 50 full-time employees, actually fewer than 50 full-time equivalents, your business is exempt from what is referred to as the “employer-shared responsibility” to provide health insurance to your employees. However, your employees will still need to have health insurance starting on 1/1/15, or they may be subject to a tax penalty. If an employee’s annual income is less than $9,350, or their household income is less than $18,700, they won’t have to get health insurance in 2014. They are also exempt if they have to pay more than 9.5% of their annual income toward their health insurance premium. If none of these exemptions exist, the employee is required to get health insurance under the so-called “individual mandate” starting on 1/1/14. In 2014, the penalties for not having health insurance are $95 per adult, $47.50 per child and up to $285 per family or 1% of the annual family income, whichever is greater. These penalties will increase significantly in 2015 and again in 2016, after which they may level off.
While the PPACA does not require employers with fewer than 50 full-time equivalents to provide health insurance, it does offer tax credits for eligible small businesses that provide insurance to their employees for the first time, or maintain coverage they already have. To qualify for a health care tax credit up to 35% (up to 25% for non-profits), a small business must meet these criteria: have 25 or fewer full-time equivalent employees, pay average annual wages between $25,000 and $50,000, and contribute at least 50% or more toward your employees’ self-only health insurance premiums or 50% on the average small group premium for your state. In 2014, the small business tax increases up to 50% (up to 35% for non-profits) for qualifying businesses. The tax credits are also available for a total of two consecutive years and are based upon a sliding scale. Employers with 10 or fewer full-time equivalents and paying annual average wages of $25,000 or less qualify for the maximum credit.
For additional information on the PPACA, please contact your local insurance broker or New Focus HR, LLC.
Written By: Kristen Shingleton, M.B.A., CCP
President, New Focus HR LLC