Small Business Healthcare in 2016

The Patient Protection and Affordable Care Act, also known as the ACA or Obamacare, was a broad piece of legislation enacted in 2010 to combat the rising costs of health insurance and provide coverage for previously uninsured Americans. Over the past five years, various parts of the large and complex bill have gone into effect, with the most dramatic changes in 2013 and 2014. Depending on the size of your company, key provisions of the ACA that are set to kick in this year may impact your employees and your business in 2016.

Originally scheduled to take effect on January 1, 2014, the employer mandate portion of the healthcare bill was pushed back and divided into increments to give businesses the time to comply with its regulations. Starting in 2015, companies with over one hundred full-time employees working thirty hours per week or more were required to provide an affordable health insurance option with a designated minimum value of coverage to at least 70% of their workforce. In 2016, companies with more than one hundred employees are required to provide this same level of coverage to at least 95% of their workforce. For the purposes of the ACA, affordable coverage is defined as costing no more than 9.5% of a household’s income. The threshold for a minimum value of coverage is a plan that shares at least 60% of healthcare expenses.

The biggest change in 2016 resulting from the implementation of the ACA’s employer mandate will affect businesses with 50 – 99 full-time employees, which will now be required to offer the same level of coverage as larger companies or face substantial penalties.

Technically, this rule went into effect in 2015, but the federal government waived the fines for non-compliance to give companies more time to implement these changes. Additional reporting requirements also went into effect to track the number of full-time employees and the level of coverage offered.

According to a study by the Henry J. Kaiser Foundation, very few businesses have altered the makeup of their workforce due to insurance coverage costs. Some have made the calculation to pay associated fines rather than provide coverage, but they are in the minority. The reasons offered include the fact that insurance coverage is a good tool to recruit and retain quality employees and that there are programs available to help finance the costs. So what can a small or medium-sized business expect to pay if they don’t provide affordable and adequate minimum value coverage to full-time employees?

• Employers with 50 – 99 employees offering no coverage: $2,000/employee, with the first 30 employees being exempt (For example, a company with 100 employees that failed to provide adequate health coverage would pay a $140,000 fine (70 x $2,000) annually.)

• Employers with 50 – 99 employees offering coverage that is not affordable or doesn’t meet minimum value: $3,000/employee receiving a federal subsidy

The employer mandate does not apply to companies with 25 full-time employees or fewer, but the ACA does contain a variety of provisions to help small companies offer health coverage to their employees.

The Small Business Health Options Program, also known as SHOP, provides a combination of tax incentives, tax breaks, and an online marketplace similar to the individual exchange to facilitate plan purchases and comparisons. SHOP is specifically designed for small companies whose employees earn less than $50,000 a year and was created with the goal of making health insurance coverage as affordable for small companies as it has traditionally been for large companies.

The Affordable Care Act is a dense and complicated piece of legislation that has been implemented in manageable chunks over the last five years. While there are no sweeping changes to the law itself for 2016, the number of small businesses impacted will increase significantly as medium-sized employers are held to the 95% affordable and minimum value coverage standard. Two excellent resources for help can be found at and

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