FAQ
1. Will I be required to provide health insurance to my employees and their dependents? If I already offer coverage, are there any requirements that I must follow?

There is no “employer mandate” to provide health insurance. However, the new law does have a so-called “free-rider” provision that only applies to small businesses with more than 50 employees and begins in 2014. Here is how it works with a couple of examples:

Employers with more than 50 employees who DO NOT OFFER insurance to their employees, but at least one employee receives a federal premium subsidy through the new exchange will be required to pay a penalty of up to $2,000 per employee for each employee over 30 employees.

For example, Acme Inc. does not offer health coverage to its 57 full-time employees. Five of its employees qualify as low-income and thus receive premium subsidies through the new Exchange. Acme will be required to pay a $54,000.00 penalty (57 employees minus 30 employees = 27 employees, multiplied by $2,000 = $54,000).

Employers with more than 50 employees who DO OFFER insurance to their employees, but have at least one employee receive a federal premium subsidy through the new exchange will be required to pay the lesser of $3,000 for each employee receiving a premium subsidy OR $2,000 for each full-time employee over 30 employees.

Using the same example as above except Acme Inc. does offer health coverage to its 57 full-time employees. Five of its employees qualify as low-income and thus receive premium subsidies through the new Exchange. Acme will be required to pay $15,000 (The lesser of 1.) $3,000 X 5 employees = $15,000, and 2.) 57 employees minus 30 employees= 27 employees, multiplied by $2,000 = $54,000)

 

An employer must file a return providing the name of each individual for whom they provide the opportunity to enroll in coverage, the length of any waiting period, the number of months that coverage was available, the monthly premium for the lowest cost option, the plan’s share of covered health care expenses paid for, the number of full-time employees, the number of months employees were covered, if any, and any other information required by the Secretary. The employer must provide notice to employees about the existence of the exchange, including a description of the services provided by the exchange.

Back to FAQ

 

Stay up-to-date with the latest Health Care Reform News that comes directly to your inbox.

Write to Congress

Join other small-business owners to ask for action and answers on health care reform.

Share Your Story

Do you have an experience to share with our nation's leaders to show why they must work to improve health care system?

Join

NSBA fights for issues that matter to small business. Support our advocacy work today and become part of our community.