I have a small business and I am wondering what the Affordable Care Act means for my business and for my employees. When do I need to start planning for the change in law?


On June 28, 2012, the U.S. Supreme Court issued its long awaited decision on the challenges to the Patient Protection and Affordable Care Act. The Court upheld one of the most controversial aspects of the Act, which requires most individuals to obtain health insurance in 2014 or pay a penalty. Although the Court’s affirmation of the individual mandate removes one of the major uncertainties of this legislation, the political debate and maneuvering will continue.

Until the law is repealed or significantly amended, employers and human resource professionals need to prepare for its full implementation. As a practical matter, your tax and insurance advisors can assist you in many aspects of the implementation.

The following provisions of the Affordable Care Act are now in effect:

  • Employers with fewer than 25 employees (whose average salary does not exceed $50,000) that pay at least 50% of an individual’s health premium are eligible to receive a tax credit beginning with the 2010 tax year.
  • Children may stay on a parent’s health insurance policy until they turn age 26.
  • Employers with 100 or fewer employees are eligible to sponsor a simple cafeteria plan.

Insurance companies and group health plans will soon be required to provide plan participants and beneficiaries with a concise summary of benefits and coverage document detailing, in plain language, simple and consistent information about health plan benefits and coverage. These summaries of benefits and coverage must be made available to plan participants and beneficiaries who enroll or re-enroll in group health coverage through open enrollment periods starting after Sept 22, 2012.

Some of the Affordable Care Act’s provisions that will need to be implemented in 2013 include:

  • Reporting the cost of employer-sponsored health care on employees’ 2012 form W-2s.
  • Communicating with employees concerning the new $2,500 limit on flexible spending arrangements.
  • Increasing Medicare withholding for employees who earn more than $200,000 per year.

In 2014, expect the following changes:

  • Employers with 50 or more full-time employees will have to either (a) provide at least a specified minimum level of health coverage that its employees can afford or (b) pay a shared responsibility payment.  This payment amounts to a penalty of $2,000 per full-time employee (not including the first 30 employees).
  • The individual mandate requiring most Americans to have adequate health coverage or pay a penalty will go into effect.
  • Health Insurance Exchanges should be operating in every state, offering insurance to certain small employers and individuals, with federal premium tax credits available to help some people buy that coverage.
  • Employers with more than 200 full-time employees will be required to automatically enroll new full-time employees in group health plans.
  • Any waiting period for employee eligibility for health benefits will be limited to 90 days.

The bottom line is that employers need to make plans now to implement the Affordable Care Act, and continue to monitor any implementing regulations or amendments to the law.

To access a list of most commonly asked questions, visit

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