Details of the federal Affordable Care Act passed in 2009 may not be familiar to many of the small businesses and small tax-exempt organizations that will be able to use it. As part of the President’s health reform plan, it’s intended to help them afford the cost of covering their employees. While the federal government defines a small employer as one having 50 or fewer employees, this act applies only when there are fewer than 25 employees.
The act grants a small business tax credits of up to 35% (a maximum of 25% for non-profits) to offset the cost of the insurance. Credits would be greatest for firms with fewer than 10 employees and an average wage of less than $20,000 a year. In 2014, this figure increases to a maximum of 50% (35% for non-profits).
Under the act (assuming it survives the court reviews it’s presently undergoing – which it may not), health insurance companies will be prohibited from turning down a business based on the health status of its employees or their family members. The insurer must accept everyone in that business group, employees and family members alike, and all health insurers must offer the same health plan to every small employer in any given state that they offer to any small employer in the state.
Beginning in 2014, businesses with fewer than 100 employees can shop for coverage at an Affordable Insurance Exchange; this is a competitive marketplace where both individuals and small businesses will be able to compare health plans, get answers to questions, find out if they are eligible for tax credits for private insurance or health programs like the Children’s Health Insurance Program (CHIP), and enroll in a health plan.
