Obamacare for Massachusetts Small Businesses
As a business owner, you’ve probably been hearing a lot of buzz about Obamacare’s “employer mandate.” Maybe you’re still wondering what it is and whether it applies to you. The short answer is that if you have fewer than 50 full-time-equivalent (FTE) employees, you don’t have to worry about the employer mandate. (For a definition of FTE, see the end of this article.) The mandate requires only larger companies to offer health coverage to employees.
That said, there are plenty of important things for owners of smaller businesses to know about Obamacare. Here’s a summary of key points for Massachusetts business owners who have between one and 49 employees:
You aren’t legally required to offer health insurance to your employees. If you have fewer than 50 FTEs, whether or not to provide coverage is entirely up to you. In Massachusetts, employers with 11 or more employees used to be subject to a penalty for failing to provide health insurance, called the Fair Share Contribution. That penalty was repealed in July of 2013.
You may be legally required to notify your employees about Obamacare. Whether or not you choose to provide insurance, if your business is covered by the Fair Labor Standards Act, you must notify all your employees about Obamacare’s basic provisions before October 1, 2013 -- and you must notify all new hires after that. The U.S. Department of Labor has published sample notices you can use. There’s no penalty under the law for failing to provide notice.
To learn whether the FLSA applies to your business, see this helpful article from Nolo.com.
You can purchase health insurance for your employees using the small business marketplace. In most states, the small business marketplace established under Obamacare is called SHOP, shorthand for “Small Business Health Options Program.” In Massachusetts, which has long had a similar program, the marketplace is called “Business Express.” You can find Business Express at Massachusetts Health Connector.
You can use Business Express to compare health plan prices and features, find out whether your business qualifies for a cost-saving tax credit, and purchase a new plan. For now, Business Express is available only to businesses with 50 or fewer employees. For coverage year 2016, however, the marketplace will be open to employers with up to 100 FTEs.
Your business may qualify for a tax credit. If you have fewer than 25 FTEs and purchase employee insurance through Business Express, you may qualify for the “small business health care tax credit.” The credit is available to businesses with employees whose average annual wages are less than about $50,000. You must also pay at least 50% of your employee’s health insurance premiums. If your business qualifies, the credit could cover up to 50% of your contribution toward your employee’s insurance -- 35% for nonprofits.
Small Business Majority offers a calculator that can help you determine your credit amount.
In Massachusetts, Business Express members with up to 25 employees may also qualify for a significant rebate on premium contributions by enrolling in the state’s Wellness Track program. Wellness Track requires you to take certain steps to encourage a healthy workplace -- for example, by promoting good nutrition, physical activity, and stress management. To learn more, visit Massachusetts Health Connector.
You have new rights under the law. No matter where you purchase your employee health plan, insurance providers can’t turn down your company based on your employees’ health status, including pre-existing conditions. Nor can they charge higher premiums for women or employees with high medical costs. (These protections don’t apply to grandfathered plans -- those created before March 23, 2010 that meet certain additional requirements.)
For more information about your rights, contact the Massachusettes Consumer Affairs and Business Regulation Office.
If you use the small business marketplace, you must offer coverage to all of your full-time employees. That means people who work for you an average of 30 or more hours per week or 130 hours per month. This calculation does not include employees covered by another plan, such as Medicare, Medicaid, or the military -- but it does include full-time workers with private plans.
What Does "Full-Time Equivalent" Mean?
Under Obamacare, a full-time employee is defined as one who works an average of 30 hours per week, or at least 130 hours per month. To figure out your business’s number of FTE’s, you need to add together the hours of full- and part-time employees. For instance, if you have two employees who work 15 hours per week, that equals one full-time worker.
Where to Get Help
Visit Massachusetts’s small business marketplace. As the Obamacare rollout continues, more information will be available from Massachusetts Health Connector. Or you can call the marketplace at 877-623-6765.
Talk to a broker. You’re welcome to use a licensed insurance agent or broker to set up a marketplace plan. If you already work with a licensed broker, you’ll probably want to contact him or her to discuss your options. You won’t pay anything extra if you use an agent or broker to help you with a marketplace plan. Agents or brokers are typically paid by the insurance companies whose plans they sell.
More information for large businesses. If you have 50 or more FTEs, see Understanding the Employer Mandate to learn more about what Obamacare requires you to do.
You may also be interested in:
What sole proprietors and independent contractors in Massachusetts should know about health insurance under the Affordable Care Act -- also known as the ACA or Obamacare.
Under the Affordable Care Act (Obamacare), beginning in 2015, Massachusetts businesses that employ 50 or more full-time-equivalent workers will have to offer insurance coverage or face a tax penalty, called the "employer shared responsibility payment."
Learn what the Affordable Care Act (Obamacare) means for unemployed residents of Massachusetts, including new options for health insurance coverage.