Does the ACA Help Small Businesses and their employees?
Small businesses have a great deal to gain under the Affordable Care Act's (ACA) employer provisions. The law does not mandate that small employers contribute to their workers' health insurance costs, however it does provide tax credits for some small businesses that maintain or contribute toward their workers' health insurance costs. These tax credits went into effect in 2010, and can help offset the costs of health insurance for businesses that employ lower-wage employees with 25 or fewer employees. Depending on the size and average wage of the employer, the tax credits could cover up to 35 percent of the business' premium contribution for employees, and will be available until 2014. After January 1, 2014, eligible small employers can receive tax credits up to 50 percent of their premium contributions, if they purchase coverage through the insurance Exchange. In addition to the tax credit, some employees of small buinesses will be eligbilble for subsidies, which could help small businesses attract and retain employees and compete with the benefits provided by larger employers.
The ACA requires small businesses to limit waiting periods for health insurance for employees to no more than 90 days and eliminate lifetime and annual benefit limits. Employers that offer dependent coverage are also required to offer that coverage to their workers' adult children up to age 26, and pre-existing condition exclusion periods for children under age 19 are prohibited.
Does the ACA impact large business?
Because the vast majority of large employers provide coverage to their workers, the new requirements of the Affordable Care Act (ACA) will not affect many large businesses. If a large business does not offer insurance and their employees receive subsidized coverage through the Exchange, the employer will face a penalty. In addition, employers with over 200 employees must provide for automatic enrollment of all full-time employees into a health plan, but employees may opt out.
Before 2017, employers with more than 100 employees will not be eligible to participate in the state insurance Exchanges. After 2017, states will have the discretion to open their Exchange to larger employers.
Large employers are not subject to all of the ACA's insurance reforms. The prohibitions on pre-existing condition exclusions, rescissions, and lifetime and annual benefit limits do apply to large employers, but the ACA's minimum essential benefits package, the new rating rules, and limits on deductibles do not apply.