With large systematic change, there will always be winners and losers. In the case of the Affordable Care Act (a.k.a. Obamacare), one of the clear winners are small businesses. A report by the common wealth fund in 2006 showed small business insurance plans are, on average, 18% more expensive than large company plans. The higher cost of healthcare helps explain why half of the insured in the U.S. are small business owners, employees or their dependents.
To address this gap, the government is rolling out the Small Business Health Options Program (SHOP) on November 15, 2015 to help small businesses with 50 or fewer full-time equivalent employees (FTE) shop for group health plans. A few key benefits of this program are: i) increased price transparency; ii) four levels of coverage to ensure businesses can find affordable plans that meet their needs; and iii) tax benefits to eligible businesses. Unlike the individual marketplace, small businesses can apply for SHOP coverage any time.
Although employers with 50 or fewer FTEs are not mandated to provide insurance to their employees, the Small Business Health Care Tax Credit is a significant incentive for businesses to offer coverage. Businesses eligible for tax credits need to have fewer than 25 FTEs making an average of about $50,000 a year or less. With the adoption of a SHOP healthcare program, a business can receive tax credits equivalent to 50% of business contributions towards employee healthcare. These tax credits are highest for companies with fewer than 10 FTEs, who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.
Working with a certified insurance agent is the most effective way for a business to explore healthcare plans in SHOP at no additional cost. A few benefits to using a licensed agent or broker include:
- Determine eligibility for SHOP and the Small Business Health Care Tax Credit
- Apply for insurance and compare price, coverage, quality, and other important features of available SHOP plans
- Get answers to questions and receive guidance to get eligible tax savings
If interested in contacting a certified insurance agent, click here.
Despite the mixed headlines on Obamacare, small businesses should take advantage of the health and tax benefits they can obtain with minimal headaches through SHOP.
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