Health care and labor in the United States is a complex web of regulations and policies. For many businesses, particularly small businesses, many of these laws may appear too complicated and can make owners and managers quite alarmed about new costs to their businesses. Its best that small business owners and managers understand how certain regulations affect them and what they can do to minimize their costs as a result of these regulations. Here, we will see how the Affordable Care Act affects small businesses and what a small business owner or manager can do about it.
What Is the Affordable Care Act?
The Affordable Care Act (ACA) is a health care reform law introduced by President Barack Obama and brought to the floor of the House of Representatives by Representative Charlie Rangel (New York-15). The ACA includes numerous reforms that helps end pre-existing condition exclusions on health care plans, removes insurance barriers by setting up health exchanges, and increases the scope of preventative care on health care plans. Essentially, the ACA tries to lower the amount of uninsured Americans by giving them opportunities to enroll in health care plans. With more people on health care plans, premiums for all insurance recipients can go down and coverage can increase. In the end, more people would, in theory, have health care, which would promote better public health results and lower the financial burden of individuals in relation to their health care needs.
What Does the ACA Do To Businesses?
The ACA has different regulations that are applied to businesses. The most important policy that is supposed to help increase the amount of American citizens have health insurance is the Employer Mandate. Although the mandate requirement is being pushed back, the mandate will force businesses with more than 50 full-time equivalent (FTE) employees on their payroll to provide a health insurance plan for all of those FTE workers. If the business does not provide health insurance, they need to pay a penalty fee annually with their business taxes. This fee is about $2,000 per employee after the first 30 employees. So, if a business has 75 FTE workers but does not offer insurance, they need to pay a penalty of $2,000 per the 45 FTE employees over the first 30 FTE employees, or $90,000 annually.
What Does That Mean For Small Businesses?
The definition of a small business may be relative to many owners and managers, but under this law, a small business is under 50 employees. If a small business has under 50 employees, they are exempt from the Employer Mandate and the penalty fee under the ACA. Still, many small businesses, in terms of their operating budget, can have over 50 FTE employees, meaning the ACA penalties or providing health insurance can be very detrimental to these business budgets.
What Many Small Businesses Are Facing
The definition of a small businesses under the ACA makes many actual small business owners and managers face grim choices. To avoid an annual penalty or the costly institutionalization of having an employer health care plan, many owners and managers considering drastic changes to their business structure. Many owners and managers have been open to cutting hours so that the amount of FTE workers employed on the payroll are reduced. Some businesses may even fire workers outright to completely reduce their entire worker head count.
How the Advance Funds Network Can Help
The Advance Funds Network (AFN) is a financial firm that provides lines of credit to small businesses. What makes AFN lines of credit different is that they offer large lines of credit to businesses, but the business will only pay for the credit they use. In addition, the payment approaches vary with AFN, such as fixed payments, percentage of sales payment, or a hybrid moment option. AFN provides lines of credit for any business that can meet several application requirements, such as having over $10,000 per month in sales and having a minimum of $1,000 in their business bank account with at least five deposits per month. Contract AFN today to see how they can help a small business meet the needs of the ACA, whether the business will invest in a health plan or pay the penalty fee.
Sources:
-http://thomas.loc.gov/cgi-bin/bdquery/z?d111:h.r.03590:
-http://www.hhs.gov/healthcare/rights/
-http://obamacarefacts.com/obamacare-employer-mandate.php
-http://online.wsj.com/news/articles/SB10001424052702304049904579517941827283028
