by Myra Irizarry, PBA Director of Government Affairs
As additional phases of the Affordable Care Act (ACA), also known as Obamacare, unfold, more and more employers and individuals are starting to ask the important questions; What do I need to do? And when do I need to do it by?
The ACA is being enacted in phases and will start holding eligible employers and individuals accountable for health insurance in January 2014. Requirements are far from being a blanket-policy governing all businesses and individual categories the same, so it is important to know where you fit in to ensure you are in compliance with the applicable laws. Be sure to consult your attorney or seek professional advice if you have questions about your obligations.
The U.S. Small Business Administration (SBA) states that over 98 percent of all U.S. businesses are classified as small businesses, having less than 100 employees. The ACA breaks this group down even further and has different requirements for businesses with one to 24 full-time equivalent (FTE) employees, 25 to 49 FTE employees, and those with 50 or more. The IRS provides the acceptable calculation to use when figuring out how many FTE employees you have in any given year. If you have seasonal or part-time workers, be sure to review the IRS website to verify your numbers are correct.
According to Kevin Kuhlman from the National Federation of Independent Business, under the ACA, all salon owners, whether they offer health insurance coverage or not, must provide employees with information regarding coverage options and the exchanges opening in time for 2014. These exchanges are essentially an insurance marketplace referred to as SHOP (Small Business Health Options Program) where business owners and individuals can compare and purchase insurance plans. Kuhlman states that salon owners who do provide coverage to employees will have extra responsibilities such as the voluntary disclosure of health insurance costs on employees’ W-2 forms, handing out a “Summary of Benefits Coverage” document describing coverage to employees, and distribution of other forms from health insurance companies.
The SHOP marketplace is designed to give small businesses and individuals more buying power by pooling their risks with others. According to the SBA, small businesses currently pay 18 percent more than big businesses, so purchasing insurance through SHOP will make options more affordable. Visit healthcare.gov for more information on SHOP.
Whether your salon falls within the under 25, or under 50 FTE employees category, there may be additional ways to customize coverage in the years to come. Kuhlman added that owners may be able to enroll employees in multiple plans or allow employees to choose a plan that best fits their individual needs.
Employer with less than 25 employees
Small businesses with less than 50 employees are not required to offer health insurance. However, employers with less than 25 employees who do offer coverage may qualify for special tax credits to help offset costs. According to the U.S. Small Business Administration (SBA), employers with less than 25 FTE employees with average annual wages of less than $50,000, who pay at least half of the cost of health insurance for their employees, are eligible for a tax credit up to 35 percent to help offset costs. In 2014, this tax credit maximum will increase up to 50 percent and is available to qualified small businesses that participate in obtaining insurance through SHOP.
Employer with 25-49 employees
While employers with 25-49 employees aren’t required to offer insurance and do not have the benefit of potential tax credits, they are exempt from the penalties larger companies are faced with if they do not offer coverage to their employees. For this group, the only real change is they will have the option to participate in the SHOP program if they do choose to offer insurance.
According to the ACA, for employers of any size, implementing a “Workplace Wellness Program” makes them potentially eligible for rewards ranging from 20 to 30 percent of the cost of health coverage. If the program is designed to prevent or reduce tobacco use, the reward can potentially reach a maximum of 50 percent.
Businesses with 50 or more FTE employees are subject to different requirements and regulations. For information regarding requirements for larger businesses and rules for the workplace wellness program, visit healthcare.gov.
Whether you are an independent contractor or an employee of a salon, it is important that everyone understand the requirements for individuals. A recent Kaiser Poll found that 57 percent of Americans polled say they do not have enough information about the ACA to understand how it will affect them. In light of this, now is the perfect time to start educating yourself and your employees to make sure everyone is covered. If you work for a salon with less than 50 employees that doesn’t offer coverage, or are an independent contractor, you will be required to obtain insurance coverage on your own, unless they qualify for an exemption.
Individuals will have access to the SHOP marketplace, just as employers do. This will make it easier to compare coverage and get the benefit of reduced rates. Coverage purchased through SHOP will begin January 1, 2014, but open enrollment for these plans begins October 1, 2013.
Kuhlman noted that individuals earning between $11,500 and $45,000 (100%-400% of the Federal Poverty Level) will have access to tax credits and cost-sharing subsidies to help reduce the cost of coverage. These tax credits are helpful because individuals and employers who qualify don’t have to wait until they file taxes to receive the credit. According to healthcare.gov, the tax credit is sent directly to the insurance company and applied to your premium, so you receive this benefit right away.
Regardless of which category you find yourself in, there is a substantial amount of information that employers and individuals should know about the Affordable Care Act. Do your homework now to understand the facts, requirements and how it will affect you and your business.
To learn more about how the Affordable Healthcare Act will affect you and/or you company, watch the Professional Beauty Association (PBA) and featured guest Kevin Kuhlman of the National Federation of Independent Business for two free PBA webinars; “Obamacare & Your Business” (watch it on demand now) and “Healthcare Reform – Your Opportunities & Obligations” (June 10, 2013 at 12pm. Register now). For more information and to browse our extensive library of on-demand education and resources, visit probeauty.org/eduonline.
About the Author
Myra Irizarry is the director of government affairs for the Professional Beauty Association (PBA). PBA advocates for the rights of every member and is dedicated to tracking, introducing and responding to legislation at both the state and federal levels with potential to affect the beauty industry. Along with our Government Advocacy program, PBA provides our members with Education, Signature Events, Charitable Outreach, Research and Business Resources. Visit probeauty.org for more information.