Affordable Care Act: Milestones for America’s Small Businesses

balance-335980_12802010 – The Affordable Care Act Becomes Law

  • Many small businesses become eligible for a tax credit worth up to 35% of the employer’s contribution to the employees’ health insurance (up to 25% for tax-exempts) to help them provide insurance benefits.
  • A new Patient’s Bill of Rights goes into effect, addressing the worst abuses of the insurance industry.

2011 – The Affordable Care Act Holds Insurance Companies Accountable

  • To ensure premium dollars are spent primarily on medical care, the law’s “80/20” rule requires that at least 80% of premium dollars collected by insurance companies must be spent on benefits and quality improvement.
  • Another tough reform requires insurance companies to publicly justify premium rate increases of 10% or more, holding insurers accountable to the small businesses they serve, which has led to a sharp decline in double-digit rate hikes.  To date, these two protections alone have already saved small businesses and consumers more than $2 billion.

2012 – The Affordable Care Act Reduces Administrative Costs and Burdens

  • The law institutes a series of changes to cut costs and improve care by standardizing billing and requiring health plans to begin implementing rules for the secure, confidential, electronic exchange of health information.

2013 – Open Enrollment in the Marketplace Begins

  • As of October 1st, individuals and small businesses can buy affordable benefit plans by enrolling in the new Health Insurance Marketplaces.  For the first time, individuals and business owners are able to make side-by-side comparisons to find a plan that fits their budget and that’s right for their families, businesses, and employees.
  • Effective October 1st, employers covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), must provide notification to all current and newly-hired employees about the Marketplace, including eligibility for premium tax credits if they purchase coverage through the Marketplace.

2014 – Insurance Plans Bought on the Marketplace Begin Coverage

  • Coverage through the individual and Small Business Health Options Program (SHOP) Marketplace begins on January 1st.  The tax credit for eligible small business participating in SHOP goes up to 50% (35% for tax-exempt employers).
  • Effective January 1, self-employed individuals must have basic health insurance, qualify for an exemption, or be subject to an individual shared responsibility payment.

2015 – Employer Shared Responsibility

  • Starting in 2015, employers with 100 or more full-time/full-time equivalent (FTE) employees) must either offer affordable coverage that provides minimum value to all full-time employees or be subject to a potential shared responsibility payment.  In 2016 and beyond, employers with 50 or more full-time/FTE employees will be subject to these requirements.  Employers with less than 50 employees — 96% of firms in the U.S. — are exempt.
  • New information reporting by insurers, self-insuring employers, and other parties that provide health coverage takes effect on January 1st.  The law also requires all employers subject to the employer shared responsibility provisions to begin reporting on the health coverage they offer to their full-time employees.  The first of these reports must be filed with the IRS in 2016.



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