Should Your Small Business Offer Health Insurance in 2014

For a good part of 2013 I have been speaking to small businesses about the Affordable Care Act (ACA).  At those speaking engagements employers have expressed concern about what should they do in 2014.  Should they provide health insurance, can they afford it or is it better to just wait and see what happens in the latter part of 2013 before making a decision?  There is no easy answer.  The answers to these questions vary depending on each small business owner’s situation.  In creating the ACA there was no stick to entice small business owners into offering health insurance but there is a carrot.  The stick in getting employers to provide coverage is directed at large employers. Small employers are not subject to an employer mandate tax/penalty of $2000 if they do not provide health insurance (see article here).   A carrot in the form of a tax credit was extended to small businesses with less than 25 employees.  These businesses may qualify for a tax credit on the health insurance premium paid by the business (see article here).  If you currently offer coverage then avail yourself of the tax credit.  If you do not offer coverage but are reviewing your options consider how an employer plan may affect your employees.  When offering an employer group plan, any Federal tax benefits (subsidies) for employees may no longer be available.  Individuals (employees shopping in the individual health care exchange market) may be eligible for a subsidy of some sort, like a tax credit, which is dependent on income level and family size.  By taking into consideration your employee’s ability, and maybe your own, to obtain a tax subsidy you can better quantify the subsidy benefits vs. a small business tax credit coupled with a tax deduction for premiums (most health insurance is a tax write off but verify this with your CPA). Unfortunately the tool to determine a possible tax credit subsidy is one of the major problems the Oregon and Federal health insurance exchange websites are experiencing (links below).  Hopefully that problem will soon be fixed and with that information it will allow you to make a more fully informed decision.

Oregon Health Insurance Exchange

www.coveroregon.com

Federal Health Insurance Exchange

www.healthcare.gov/