Health Insurance For Business Owners

The Affordable Care Act provides structures for increasing health care insurance coverage among employees and business owners. Business owners can fall into one or both of two basic categories under the law, the individual and family applicants, and the group health providers.

The national healthcare reform adopted a market-based approach, which uses tax subsidies and tax credits to provide incentives and lower premiums.

Business owners must sift through a large amount of information; many owners find a comparison-shopping tool to be an excellent method for reducing the time and effort needed to find the best prices.

The FREE tool above will help business owners who prefer to manage choices rather than retain agents to assess and recommend coverage.

Increasing Coverage Among Business Owners

As individuals, business owners can research the insurance coverage marketplace created and operated by the state in which they reside, or by the federal government acting on behalf of the state government.

These programs provide tax subsidies for those within 400 percent of the area poverty level income; enrollment opens in November of each calendar year. As business owners, they can qualify as employers under the Act and participate in an employer-sponsored group health plan. These programs have continuous enrollment periods.

Self-Employed Business Owners

Under the Affordable Care Act, the rules state that persons who operate businesses without employees are not employers. They are eligible for individual and family coverage provided through the marketplace in the state of their residence.

Businesses with no employees sometimes use independent contractors to perform work; contractor arrangements do not change the legal status of the business owner. Engaging contractors does not qualify as an employer-employee relationship for the purposes of the Act.

Self-employed owners can use a comparison-shopping tool to find coverage that meets their needs.

Impact On Small Business Owners

The impact of the Affordable Care Act on small business without employees and self-employed persons will likely not be in the incentives concerning business coverage for employees; rather, it will most noticed in the policy changes contained in the individual and family insurance provisions.

The Affordable Care Act makes powerful policy reforms in the individual insurance marketplace:

• Guaranteed access to coverage without denial, or surcharges for pre-existing conditions.
• Required insurance coverage of essential benefits.
• Participation in insurance exchanges created by the state, or the federal government acting as if the state, government.
• Authorized individual tax credits to subsidize the costs of health insurance premiums.
• Limits on the amounts chargeable for age.

The broad policies of the Affordable Care Act contemplate the healthcare needs of self-employed, sole proprietors, business operators, and employees. Illness and hospitalization can devastate an otherwise productive businesses; it can cause catastrophic losses and business failures.

By increasing rates of health care coverage, the Act improves the likelihood of small business success.

When shopping for quotes, owners can use comparison-shopping tools to balance lower premium costs against high deductibles to make the choice that best fits budget and costs factors.

Employer-Sponsored Group Health Plans

The Affordable Care Act mandates an annual payment or health care coverage for employees of businesses that employ fifty or more full-time employees. These are large businesses under the provisions of the law.

Implementing rules define full-time as persons regularly working thirty or more hours per week. Businesses, which employ fewer than fifty full time employees, are not required to provide healthcare coverage, and employees can get coverage through state-operated health insurance exchanges. In states that do not establish exchanges, the federal government can establish an exchange.

Acting as if it were the state government, it provides a network of insurance providers and subsidies for qualified residents of the state. Business owners face an array of rules, technical terms, and legal determinations. A comparison–shopping tool can reduce the difficulty of assessing insurance options.

Health Care Laws Protects Business Owners

Employer-sponsored group health plans can protect businesses by ensuring that key employees and owners have adequate preventive health services and affordable medical care.

Access to preventive healthcare services maximizes opportunities for full and active participation for business owners and employees, which benefits employers. Employer-sponsored group health programs can provide healthcare coverage for business owners along with employees, and in some cases, even when there is just one other employee.

A comparison-shopping tool will help determine options for which the business or individual may qualify.

The Individual As Owner-Employer

The laws of the state of the business’ location determine its status under the Affordable Care Act, for example, some states require business licenses for particular activities. Federal law permits group health coverage for a company with one employee, who is not an owner-employee or spouse. If otherwise in compliance with state laws, a single employee creates a valid employer classification.

The tax credit policies of the Act apply to the business owner with one employee to the same extent as a business with up to twenty-five employees. An important purpose of the law is to protect businesses against loss or bankruptcy from the impact of healthcare expenses due to illness or hospitalization.

The law provides for insurance coverage to reduce out of pocket expenses and place an overall cap on annual contributions to health and medical expenses.

The Act makes group health coverage available without regard to prior or pre-existing medical conditions of the business’ employees. These policies apply equally to an employee-owner with at least one employee, as to those with up to twenty-five employees.

The Employer Health Care Tax Credit

The law provides a tax credit for employers who obtain group insurance through the small business marketplace. It provides credits against income for employers with between 1- 25 employees to lower the costs of health insurance.

The tax credit formula grants tax relief for an amount up to half of the employer’s contribution toward employee premiums. The credit is limited to the following:

• Employers obtaining coverage through the Small Business Health Options Program marketplace;
• Up to fifty-percent of employer contributions or thirty-five percent of contributions from tax-exempt employers;
• Plans with a minimum participation rate of seventy percent (70%) or as determined by state law, currently fifty (50%) percent in Tennessee and seventy–five (75%) percent in Texas, Arkansas, Iowa, New Hampshire, and New Jersey; and
• Whose full time employees’ incomes average approximately $50,000 or less per year.
• It is important to note that the law does not require employers to offer insurance to part time employees, or to dependents. The participation requirements do not apply during the enrollment period so that employers can start-up and offer a plan to employees. The tax credit has a flexible scale, and the highest credits go to smaller companies; the highest rates would go to those with ten or fewer employees with average incomes of $25,000 or less.

Tax Consequences Of The Small Business Credit

The IRS policies on the Tax credit favor flexibility and full use of the incentives. For example, if a small business employer did not owe taxes in a given year, it could save the tax credit for use to amend an earlier filing or a later year filing.

Premiums paid in excess of the tax credit amount still qualify as business expenses resulting in a credit and a deduction for employee health care premium payments. Tax-exempt small business employers who pay employee premiums can receive a tax credit or a tax refund.

Companies can use credits for premiums paid at any time within two years from the date it paid monies, and they can apply credits to later or earlier tax years. In the case of an oversight, and failure to claim the credit, the IRS allows three years from the tax return's filing date.

Health Care Benefits For Business Owners

Health insurance for business owners is an important ingredient for long-term business success. Self-employed persons and sole proprietors can compare quotes for insurance coverage for individuals and families in healthcare exchanges.

Small employers with twenty-five or fewer employees can use comparison-shopping to assess the many choices available in the Small Business Health Options Program and receive tax credits for up to fifty percent of contributions. When combined with coverage for employees, qualified business owners have a tremendous incentive to shop for the best available values.

They can use tax credits to reduce costs, and reduce risks of loss due to illness or incapacity of key employees. Tax credits reduce the cost of premium contributions, and combined with standard deductions, the law further reduces the costs of employer premium payments.

For those not eligible for tax credits, the search tool can maximize the value of expenditures for health coverage.

Be sure to enter your ZIP code into the FREE tool located below to start your search!