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What Businesses with up to 50 Employees Need to Know About the Affordable Care Act

Numerous provisions of the Affordable Care Act are slated to go into effect in 2013 and 2014. Many of these provisions will affect employers with up to 50 employees, and it is critical for businesses to be prepared. The U.S. Small Business Administration delineated some of these major changes, which include:

  • Small Business Health Options Program: Small employers with up to 50 employees will have access to the new health care insurance marketplaces through the Small Business Health Options Program (SHOP) in 2014. The goal is to lower costs by pooling risk.
  • Notice to Employees Regarding the Marketplace: By Oct. 1, 2013, businesses with at least one employee and $500,000 in annual business volume must notify employees about the Health Insurance Marketplace and tax credits that would be available if coverage is purchased through the marketplace.
  • Summary of Benefits and Coverage: To help employees understand their coverage and options, employers must provide employees with an explanation of their plans’ coverage and costs.
  • Rebates: To encourage efficiency, the ACA requires insurance companies spend at least 80 percent of premium dollars on medical care rather than administration. Insurers who fail to meet this standard must provide rebates to their policyholders.
  • Increased Medicare Withholding and Investment Taxes: As of Jan. 1, 2013, the employee portion of the Medicare Part A Hospital Insurance increased from 1.45 percent to 2.35 percent for employees with incomes of more than $200,000 (or $250,000 for married joint filers). For those same taxpayers, a 3.8 percent Medicare tax will be assessed on net investment income such as taxable capital gains and dividends.
  • Coverage Waiting Period: Beginning January 1, 2014, employees eligible for employer-provided health insurance cannot be required to wait more than 90 days for coverage.

The Affordable Care Act is a complex law with wide-ranging impacts on American businesses. For guidance in complying with the ACA, contact an experienced labor and employment law attorney serving the greater Washington, D.C., area.

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