Health Care Reform and Small Business: Is a PEO the Answer?
When it comes to ongoing changes in health care reform, small businesses need all the help they can get. And for many of those small businesses, a Professional Employer Organization (PEO) — where employees become part of a much bigger benefits and administrative employment group — could be the solution to their health benefits challenge.
Upcoming Affordable Care Act Requirements
Health care reform and small business requirements are always in flux. Staying current with changes required by the Affordable Care Act (ACA) is a challenge in itself. Here’s a brief review of some upcoming ACA requirements that both small and larger-sized businesses must meet in 2015-2016, according to Journal-News and postcrescent.com:
As specified by ACA:
- Small businesses with less than 25 full-time equivalent (FTE) employees earning annual wages under $50,800 (in 2014) can take advantage of tax breaks, tax credits, and other incentives through the Small Business Health Option Program (SHOP). Please note that states choose whether to define smaller employers has having 1-50 or 1-100 FTEs. In some states, the threshold will be 100 FTEs.
- In October, these small businesses — together with agents and brokers — can create an account, choose a SHOP-certified agent or broker and verify their eligibility for coverage. In November, the SHOP exchange will open to businesses with 50 or less FTEs.
- Businesses with 50-99 full-time employees, including FTEs, may qualify for relief from penalty assessment under the Employer Shared Responsibility (ESR) provision in 2015 (Internal Revenue Code section 4980H). However, they must meet certain conditions and certify they meet these conditions in ESR (IRC section 6056) reporting.
- Larger businesses (100+ full-time employees, including FTE employees) must provide adequate and affordable coverage for their full-time employees and their dependents or potentially face a penalty beginning in 2015. These businesses will be ineligible to use the SHOP at least until 2017, at which time states will decide whether they will allow larger businesses participate in the SHOP.
How a PEO can help
A Professional Employer Organization is a co-employment model where employees of small or mid-sized businesses become part of a larger benefits and administrative employment group. PEOs are an increasingly popular resource for small businesses in search of options for handling HR management, payroll processing, payroll tax filing, risk management, employee benefits administration, and compliance with state and federal laws and regulations.
And with their comprehensive resources and expertise, a PEO may be the best bet for staying compliant with new (and ever-changing) ACA regulations.
While it does not assume these responsibilities in full for clients, a PEO can help assist you as you navigate your health care obligations with regards to these critical areas:
- Calculating the number of FTE employees*
- Determining eligibility, contributions, and employee classifications
- Reporting of qualified medical coverage
- Compliance with tax-related changes
- Changes related to health savings accounts
- Associated tax reporting
Paychex PEO offers your business:
- Access to more plan designs at competitive prices.
- One-stop shopping for most, if not all, benefit and insurance needs, including medical, dental, life, disability, vision, and other insurance such as workers’ compensation.
Health care reform and small business are more inextricably bound than ever before. Learn more about how Paychex PEO can help you find your way through your health insurance obligations and simplify your life as a small business owner.
Professional employer organization (PEO) services are sold and provided by Paychex Business Solutions, LLC (PBS) and its affiliates, which are registered and licensed to sell and provide PEO services, including in Florida. PBS FL license numbers are Paychex Business Solutions, LLC, GL7, PBS of Central Florida, LLC, GM14, PBS of America, LLC, GM46, Paychex PEO I, LLC, GM455, Paychex PEO II, LLC, GM456, Paychex PEO III, LLC, GL193, Paychex PEO IV, LLC, GM519 and Paychex PEO V, LLC, GM 522.
*Please note that this is not a precise calculation. An employer may need to perform additional calculations when the payroll crosses months.