Does the Affordable Care Act (ACA) provide any advantages to small businesses?

Yes, depending on your situation, ACA can make it possible for companies that may have previously been unable to afford insurance benefits to now offer it to their employees. Read on to learn more.

Small Business Health Options Program (SHOP) Features

Under the Affordable Care Act, during the first year of operation, small businesses that qualify for coverage through a SHOP will be able to offer their employees a single Qualified Health Plan (QHP) option. SHOPs will offer qualified small groups access to QHPs in each state, and will provide flexibility in the amount that members of the small group contribute toward the total premium.

To qualify for SHOP coverage, a business must:

  • Be located in a SHOP’s service area (generally a state)
  • Offer coverage to all full-time employees (those working an average of 30 or more hours per week)
  • Have at least one eligible employee on payroll
  • Have 50 or fewer full-time equivalent (FTE) employees on payroll
    • This methodology includes part-time employees, but not seasonal employees (those working fewer than 120 days per year)
    • While the Federally-facilitated SHOPs (FF-SHOP) must determine eligibility using the definitions above, State-based SHOP Marketplaces have flexibility in their counting approaches

The premium tax credits (subsidies) and cost-sharing reductions offered to individuals are not available to employers and families covered through a SHOP. However, employers meeting certain size and average wage requirements-see Shop Benefits section below—may receive a small business tax credit on their tax returns of up to 50% of the employer’s contribution to the premium.

 

SHOP Benefits

The SHOP Marketplace provides consumers, both employers and employees, with many benefits.

Only QHPs will be offered through the Marketplaces. Buyers will be assured that the available plans meet network adequacy and benefit design standards of the SHOP.

Premiums for the employers and employees will not be based on their health or medical history, but can only vary based on age, family composition, geographic area, and tobacco use.

A SHOP provides unbiased information and comparison tools for consumers. The tools available through the Marketplaces will help consumers with “apples to apples” comparisons among health plans.

The small business tax credit applies to small businesses with up to 25 FTE employees that pay employees an average annual wage below $50,000 and that contributes 50% or more towards employees’ health insurance premiums.

NAR members who are owners of small businesses should contact SASid’s professionally licensed staff at 877-267-3752 for advice and/or direction navigating their options.  Products and insurance companies may be different per exchange.