Health insurance open enrollment is nearly upon us once again. It starts on November 1 and ends December 15, 2018. As a business owner, you have certain requirements you must meet depending on the number of employees you have. This can be a confusing issue, so we’ve broken it down for you below.
The Self-Employed Business Owner
As a self-employed person, you are not required to purchase health insurance via the Health Insurance Marketplace (also known as the Health Insurance Exchange). However, you are eligible to do so. If you run a business that produces income and has no employees, you’re considered self-employed. “Employees” are generally workers whose income you report on a W-2 form at the end of the year. Therefore, if you are not issuing any W2s, you fit into the definition of self-employed. This is common for freelancers, consultants, and independent contractors.
Small Businesses with Less Than 50 Employees
The Affordable Care Act (aka “Obamacare”) states businesses with less than 50 employees are not required to provide “affordable” health care coverage. See the definition of affordable in the next section for businesses 50 employees or more. However, businesses of this size offering healthcare benefits may be eligible for tax credits based on the following definition.
Employers with 25 or less employees with average annual wages of less than $50,000, could be eligible for tax credits up to 50% of the amount the employer contributes (at least 50%) toward employee insurance premiums.
Small Businesses with More Than 50 Employees
Businesses with 50 or more employees are required by law under the Affordable Care to provide “affordable” health insurance for employees. The definition of affordable is stated as the employee’s annual cost for health coverage can be no higher than 9.86% of their annual income in 2019. It was 9.56% in 2018. Businesses of this size not offering affordable health insurance will be subject to tax penalties of $2320 per full-time employee. The good news is the first 30 employees are excluded from the tax penalty.
It is important to note, starting July 1, 2015 businesses no longer meet their tax obligation by providing reimbursements to employees who purchase private health insurance. Employer Payment Plans such as this fail to satisfy the requirements of the ACA. Doing so may subject the business to a $100 per day excise tax per applicable employee or $36,500 per year, per employee.
Purchasing health insurance as a business can be confusing. Our trained experts can help! Contact us today.