Busting Small Business Affordable Care Act Myths
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Last Updated: 11/21/2013
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Updated: July 6, 2016
Health care and other insurance benefits can be a great way for companies to attract the most talented candidates to their companies. However, there are several small business compliance myths associated with providing health care. Much of the false sentiment surrounding the health care law centers on confusion that has resulted from the implementation of the Affordable Care Act (ACA). This is fairly common whenever new, complex legislation is created. Even so, it's important for small business owners to separate fact from fiction.
Myth: Lawsuits will abound
Fox Business recently noted that many small business owners hold the erroneous belief that they will be sued if they fail to offer some sort of health insurance policy under the new laws. In fact, there is no requirement to offer insurance. There is only a risk of being assessed an excise tax under the employer shared responsibility (ESR) provision if an employer is subject and a full-time employee gets a premium tax credit through the exchange. The article states that according to Rocket Lawyer 97 percent of American enterprises do not have to provide insurance or risk a potential ESR assessment because they have fewer than 50 employees on their payrolls.
The current ESR provision only applies to companies with up to 100 or more full-time (including full-time equivalent — FTE) employees or more. Also, enterprises with more than 50 full-time workers, including FTEs are eligible to take advantage of a fee exemption for their first 30 full-time employees under one of the two types of ESR penalties.
Fact: Traditional health care is still available
There are several new programs being implemented under the ACA, including the SHOP exchange. This marketplace allows small businesses to pool their purchasing power to provide coverage at the lowest possible rates.
However, Entrepreneur noted that it's still possible and viable to pursue traditional coverage varieties. Private market health care providers have been active for many decades and are still great options for both startups and large corporate leaders. In fact, the article stated that the majority of America's small firms will stick with plans from private coverage outlets, even with the ACA providing quality options.
Myth: ACA policies are too expensive
Many small businesses have expressed unhappiness over the ACA, indicating that they believe the policy makes it too expensive for them to provide adequate coverage. Although it may require some additional work and due diligence to find the right insurance provider, quality plans are available at reasonable rates.
According to Entrepreneur, a significant amount of small business funding is not required to implement a plan that employees will appreciate. The source reported that there may be income tax credits available to companies with fewer than 25 FTE employees that cover at least 50 percent of individual coverage premiums.
Fact: Lawyers are needed
Going it alone in the insurance game is a dangerous prospect for even the most savvy business leaders. It can be difficult to juggle the demands of owning a company and installing the right healthcare plan for employees. Doing so could lead to poor coverage, unhappy workers and even legal issues if mistakes are made.
When creating a health care coverage plan, owners should consult with a reputable lawyer to avoid small business legal challenges that can result from sloppy policy implementation. Consulting with a lawyer may represent an additional expense, but it's a worthy investment that will allow businesses to better navigate the changing insurance landscape.