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There are some potential Obamacare penalties that small businesses should know about. Under the Affordable Care Act, small businesses have a laundry list of chores that they'll need to check off in order to be compliant with the new law.
First, there's the requirement to mail "Obamacare letters" notifying all employees about the health insurance marketplaces by October 1. Failure to do so, however, will not result in a fine or penalty, according to the Small Business Administration.
But for small businesses with at least 50 full-time employees, failure to offer health insurance to those workers by 2015 does come with potential penalties under Obamacare. Here's a general overview of what small business owners need to know:
When Businesses Fail to Offer Health Insurance
Obamacare requires that employers with at least 50 full-time workers (those who work at least 30 hours a week, according to the Department of Labor) offer health insurance coverage to those workers. Otherwise, you'll have to make a tax payment called the Employer Shared Responsibility Payment (ESRP). Many businesses may opt to just pay the ESRP if it's cheaper than offering insurance. So how much is it?
If you decide not to offer insurance, you'll have to pay an annual fee of $2,000 per full-time employee. However, there's no penalty for the first 30 employees, according to the Department of Health and Human Services.
Health Insurance Must Meet Minimum Requirements
There is also a separate Obamacare penalty for small businesses if the health insurance you offer doesn't meet the minimum requirements as listed in the Affordable Care Act. This is an annual payment of $3,000 per full-time employee who would have saved money by buying insurance through Obamacare's health exchanges for individuals instead.
How do you know if the health plans you're offering meet the minimum requirements? One simple solution is to choose a health plan (or plans) found in the health insurance exchanges for small businesses; all of those plans fulfill Obamacare's "minimum value" requirements.
Again, these penalties are only for small businesses with 50 or more full-time employees.
Businesses with fewer than 50 full-time workers can also use Obamacare exchanges to offer insurance to their workforce. There are even some tax breaks available for certain businesses, which our "Understanding Obamacare" series will explain tomorrow.
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