The biggest changes brought by the Affordable Care Act go into effect Jan. 1, and many Americans, especially small business owners, do not know exactly how the bill will change employee healthcare.
Ragan Hunt, executive director of the Kentucky Voices for Health, presented a workshop Monday at the Madison County Extension Office on the ACA and what it means for Kentucky small businesses.
The dozen people that were present peppered Hunt with questions about tax credits, requirements on offering health insurance and how the bill’s initiatives are being funded.
Hunt admitted that the long-term affects of many of the bill’s stipulations are still unknown and won’t be determined until the ACA has been implemented. However, federal and state governments hope that under the ACA, more small business owners, their employees and the self-employed will be able to access affordable health insurance plans.
Small business tax credits
The ACA defines small businesses as those with fewer than 50 full-time employees and pay average annual wages of $50,000 or less, Hunt said.
Small businesses are not required to offer health insurance to their employees and will not be fined for this choice, Hunt said.
However, businesses that employ 25 or fewer full-time workers are eligible for tax credits if the owners offer health insurance to workers. The credits can equal up to 50 percent of a business’s portion of the premium.
In order to be eligible for the tax credits, the business must pay at least 50 percent of the premium cost for employees, Hunt said.
Businesses can actually start claiming this credit in their 2013 taxes for up to 35 percent of employers’ portion of the health insurance premiums for employees.
Statistics from 2011 reveal that two out of five businesses in the nation will qualify for these tax credits, Hunt said. This could affect 19.3 million employees and possibly provide $15.4 billion in tax credits to small businesses.
Currently 60.4 percent of small business employees have health insurance, but a study by the Rand Institute found that the ACA may be able to expand health insurance to 85 percent of these employees.