Obamacare for Michigan Small Businesses
As a business owner, you may have heard the 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 Michigan 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.
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.(The original deadline for notifying current employees was October 1, 2013; after that all new hires must be notified.) 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 or not the FLSA applies to your business, see this helpful article from Nolo.com.
You can purchase health insurance for your employees using the new small business marketplace. The online small business marketplace for Michigan, called the SHOP (Small Business Health Options Program) is located at Healthcare.gov. You can use the online SHOP to compare health plan prices and features, find out whether your business qualifies for a cost-saving tax credit, and purchase a new plan. You can also purchase a marketplace plan through an insurance agent or broker -- or directly from an insurer offering qualified SHOP plans. For more information, see the end of this article.
Your business may qualify for a tax credit. If you have fewer than 25 FTEs and purchase employee insurance through the SHOP, 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.
You have 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 DIFS Department of Insurance and Financial Services.
If you use SHOP, 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.
To use a marketplace plan, a certain percentage of employees to whom you offer coverage must sign up for it. If your business doesn’t meet the minimum participation requirement, you may be able to sign up for a plan during a limited open enrollment period at the end of the year. Ask a marketplace representative or your broker for more information.
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 FTEs, add up the hours of full- and part-time employees. For instance, if you have two employees who each work 15 hours per week, that equals one full-time worker.
Where to Get Help
Visit the SHOP at Healthcare.gov.
Talk to an insurance agent or broker. You’re welcome to use a licensed insurance agent or broker to set up your SHOP 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 SHOP plan. Agents or brokers are typically paid by the insurance companies whose plans they sell.
Find an insurer who sells SHOP plans. Click here to see a list of insurers offering marketplace plans in Michigan. You can sign up for a plan directly with a qualified insurer.
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:
Six things Michigan sole proprietors and independent contractors should know about health insurance under the Affordable Care Act (Obamacare).
Under the Affordable Care Act (Obamacare), beginning in 2015, Michigan 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 Michigan residents, including new options for health insurance coverage.