By providing healthcare to employees, there are between 1.4 and 4 million businesses with fewer than 25 employees and average salaries of $50,000 or less that are already eligible for tax credits of up to 35 percent. After January 1, 2014, the credit increases to 50 percent and will be available for any two consecutive years.
The 80% Rule
Since 2011, insurance companies have been required to spend at least 80 cents of every dollar on medical care and not administrative costs — or refund the difference. And it works — in California, for example, 4,400 companies received $3.5 million in refunds from insurance company UnitedHealth in June this year alone.
Companies with fewer than 50 employees do not have to provide insurance, but the new law will make it easier and cheaper if they do.
Businesses with 50 or more employees must provide health insurance or pay a penalty. If the business fails to comply, the penalty is $2,000 for each full-time employee (with a 30-employee deduction.) Additionally, if the coverage offered is too expensive (defined as costing more than 9.5 percent of the employee’s household income), the penalty is $3,000 per employee who must buy insurance with a government subsidy. However, only 200,000 small businesses will be affected by these changes because over 96 percent of small businesses fall below the 50-employee threshold.
Companies with up to 100 employees can benefit from the option of buying lower cost health insurance through employer-only exchanges, also set up by each state. This might also reduce costs for smaller firms if they add their employees to a much larger pool of insurance customers.
Edited by ms_wonderland - Nov 18 2012 at 7:10pm