{"id":1657,"date":"2015-05-11T09:46:30","date_gmt":"2015-05-11T09:46:30","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=1657"},"modified":"2017-10-13T11:19:50","modified_gmt":"2017-10-13T18:19:50","slug":"will-obamacare-penalties-kill-your-small-business","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/will-obamacare-penalties-kill-your-small-business\/","title":{"rendered":"Will Obamacare Penalties Kill Your Small Business?"},"content":{"rendered":"
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Small business owners need to take active steps to avoid the ACA’s penalties<\/figcaption><\/figure>\n

So the first thing I need to say, before you jump to any wrong conclusions, is this: This blog is only about the nuts and bolts of you running a small business. We cover \u201chow-to\u201d stuff here. Not politics.<\/p>\n

Yes, of course, the politics of a subject like the Affordable Care Act (more popularly known as Obamacare) merit continued careful discussion. And, sure, if participants want, that discussion can be spirited.<\/p>\n

But that\u2019s not what we want to do with this blog and that\u2019s not what I want to warn you about in this particular post.<\/p>\n

Rather I\u2019m concerned about a very specific risk that small business owners need to address now: The penalties baked into Obamacare that many (most?) small businesses need to actively work to avoid.<\/p>\n

And note, too, that the time clock is running down. You only have until the end of June to sidestep serious trouble.<\/p>\n

Note:<\/strong> If you’re only interested in our monograph about the Affordable Care Act, just scroll down the page.<\/p>\n

The Big Problem for Small Businesses<\/h2>\n

Okay, so probably you already know this. Under the Affordable Care Act (ACA), most small businesses do not need to provide health insurance to employees.<\/p>\n

The actual cut-off? Employers with fewer than 50 employees don\u2019t under the law have to provide this fringe benefit.<\/p>\n

But here\u2019s the rub which too many people don\u2019t understand: If a small business does<\/em> provide health insurance for its employees\u2014even if the small business isn\u2019t required to provide health insurance\u2014the employer must provide insurance that complies with the Affordable Care Act.<\/p>\n

If the employer provides insurance that doesn\u2019t comply, the penalty is $100 per day per employee. That adds up to $36,500 per year per employee.<\/p>\n

I say this without exaggeration: These penalties are so catastrophic that surely they will kill many small businesses.<\/p>\n

Example:<\/strong> If some struggling small business owner pays the individual health insurance premiums only for two\u00a0single unmarried employees, but then has (say) three\u00a0other married employees who get insurance through their spouses\u2019 employers, that\u2019s a non-compliant healthcare plan. And very possibly the business owner can be assessed $36,500 in penalties for all five employees. That\u2019s $182,500 in penalties.<\/p>\n

Example:<\/strong> If some well-meaning small business owner feels he can\u2019t provide real health insurance and so provides $200 or $300 a month in cash to each of his ten employees so they<\/em> can buy their own health insurance, again, that\u2019s a non-compliant healthcare plan. And very possibly the small business owner can be assessed $36,500 in penalties for each of the ten employees. You can do the math too, of course, but I still want to write the number down here. That\u2019s $365,000 in penalties.<\/p>\n

Why Small Businesses Must Act ASAP<\/h2>\n

The Obamacare penalties have been in the law since the beginning, by the way. But originally they weren\u2019t going to be effective until 2014.<\/p>\n

And then, for small businesses, they actually didn\u2019t even matter until now because early this year, the IRS issued a notice saying that it would temporarily not assess<\/em> the penalties (see Notice 2015-17<\/a>).<\/p>\n

But that period of temporary relief ends June 30, 2015.<\/p>\n

With the exception of multiple-employee S corporations (which are still waiting for guidance and so are still being granted temporary relief), small business employers need to make sure they are not violating the market reform rules when the grace period ends on June 30th, 2015<\/strong>.<\/p>\n

Before that date, small businesses need to get with the program and figure out a plan for health insurance that complies with the new market reform rules.<\/p>\n

By our analysis, after June 30th<\/sup> small businesses only have three options when it comes to providing their employees health insurance:<\/p>\n