Q. I’m self-employed and am hiring employees. Under Obamacare, am I obligated to provide health insurance for them?
A. No, unless you’re hiring at least 50 full-time equivalent (FTE) employees. Businesses with fewer than 50 FTE employees (that’s 96% of businesses in the United States) have no obligation to provide health insurance to their employees.
If there are SHOP plans available in your area (which is not the case in much of the country), you may find that the small business tax credit makes health insurance an affordable benefit you can offer your employees. If you have fewer than 25 employees and their average income is less than about $56,000, there’s a tax credit that you can claim for up to two years for your business if you purchase a plan through the SHOP exchange and pay at least 50% of your employees’ premium (note that the average employee income limit started out at $50,000, but has been indexed over time).
In all areas of the country, there are small group health plan options available directly from insurance companies. You can buy a plan with the help of a local broker or agent who can walk you through the process and provide ongoing assistance with the coverage. All small group health plans — regardless of whether they’re SHOP-certified — are compliant with the Affordable Care Act if their effective date is January 2014 or later.
You also have the option to offer a small group plan that you purchase directly from a health insurance company or with the help of a broker. And if you want your employees to find their own health insurance but you’d like to help out with the cost, you could choose to offer a QSEHRA or ICHRA, both of which will allow you to reimburse employees on a pre-tax basis for some of the cost of their individual market coverage.
But the Obamacare employer shared responsibility provision (ie, the requirement that employers offer health coverage) only applies to businesses with at least 50 full-time equivalent employees. They’re required to offer affordable health insurance, but the vast majority of these businesses that size were already offering coverage for their employees prior to the ACA.
Employers subject to the shared responsibility provision are assessed a penalty if they do not offer affordable coverage and at least one of their employees receives a subsidy to purchase individual health insurance in the exchange.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.