Obamacare for Washington Small Businesses

As a business owner, you’ve probably heard 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 Washington 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 employees about Obamacare’s basic provisions. 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 Washington’s small business marketplace. The small business marketplace is often called the SHOP, shorthand for the Small Business Health Options Program. You can find Washington’s SHOP at Washington Healthplanfinder. SHOP programs are available for businesses with fewer than 50 employees. By 2016, eligibility will expand to include businesses with up to 100 employees.

You can use the marketplace to compare health plan prices and features, find out whether their business qualifies for a cost-saving tax credit, and purchase a plan.

Your business may qualify for a tax credit. If you have fewer than 25 FTEs and purchase employee insurance through the marketplace, 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 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 Washington State Office of the Insurance Commissioner.

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.

To use a marketplace plan, at least 75% of employees to whom you offer coverage must respond to your invitation. If your business doesn’t meet the minimum participation requirement, you may still be able to sign up for a plan during a special enrollment period at the end of this 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 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 Washington’s small business marketplace. You can get more information from the SHOP at Washington Healthplanfinder. Or you can call the marketplace at 855-923-4633.

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.