Should you be so lucky to be a small business owner, you’ve no doubt wondered how the new Affordable Care Act will impact your business. This may have led you on a confusing journey across the internet, turning up websites which aren’t quite sure what the law entails either. To make matters worse, many of these sites are heavily opinionated and don’t reflect the true pros and cons of ObamaCare. In an attempt to make matters clearer, we’ve put together this list of essential things you need to know. This list contains both pros and cons of how the new law may impact your small business.

Companies with More than 50 Employees Must Offer Health Insurance

Along with the Affordable Care Act came the debate over the definition of exactly what is a “small business.” While the general agreement was that businesses with less than 25 employees classify as a small business, ObamaCare recognizes it as a business with less than 50 full-time employees. With that being said, the new law is more lenient toward smaller businesses with less than 50 employees. These companies are not required to provide health care coverage for their employees, while those with 50 or more employees are required to.

Those companies with 50 or more employees will incur a stiff fine if they don’t offer health insurance. According to Forbes, any business that refuses to cover its employees will have to pay a$2,000 penalty for each full-time uninsured employee after the first 30 or $3,000 per employee who choose to utilize government subsidies to help pay for their own insurance.

Smaller Businesses May Earn a Tax Credit of Up to 50 Percent of Healthcare Insurance Premium Costs

The Affordable Care Act takes the costs of providing your employees with health insurance into consideration. Because of this, they’re offering a tax credit to small businesses to help pay the premiums. This credit varies in amount, but can provide up to 50% of premium costs for small companies that qualify. In order to qualify for the credit, businesses must purchase an insurance plan through a Small Business Health Options Program – or SHOP – exchange. Qualifying businesses must have less than 25 employees, they must be paying half the premium themselves or the average employee pay must be less than $50,000 annually. Small businesses that qualify for the full credit must have no more than 10 full-time employees with an average wage of $24,999 or less.

Small Businesses Can Purchase Cheaper Health Insurance Through SHOP Exchanges

The SHOP exchange program works in much the same way as comparison shopping sites do for booking airline tickets and hotel rooms. It allows small businesses to select coverage requirements and browse through insurance companies that offer those requirements while also allowing them to compare prices. Although models such as the SHOP exchange already exist, this one provides a benefit for small business owners as it allows them to spread their large medical expense risks. This is due to being part of a network rather than having individual plans. In order to spread these risks, the business must have less than 50 employees at the time of application. Employees won’t have much of a say in which providers they want until 2014, so companies will have to carefully consider this when choosing an insurance company.

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