Affordable Care Act - Obama Care

The ObamaCare employer mandate set to begin in 2014 has been delayed until 2015. The ObamaCare "employer mandate" is a requirement that all businesses with over 50 full time employees provide health care for their employees or face a tax penalty.

The tax penalty is between either a $2,000 per employee tax, if the employee purchases insurance without tax credits or a $3,000, if the employee uses premium credits to purchase insurance through the exchange. The employer mandate is officially referred to as a "shared responsibility fee", as employers tax will go to help fund tax credits to Americans using the health insurance exchanges.

Employers will have to contribute at least 50% of an employees premium cost to receive tax credits. The employee's share cannot exceed 9.5% of the employees family income, in other words highly paid employee will have to foot the bill for high-end insurance plans, especially those subject to the 40% excise tax.

96% of all firms in the United States – or 5.8 million out of 6 million total firms – have under 50 employees and will not be penalized for choosing not to provide health coverage to their employees. 96% of those firms already cover full time workers. That means less than .2% of small businesses (10k out of 6 million) will actually have to provide insurance to full-time employees or pay the shared responsibility fee due to ObamaCare.

If a small business has 25 or less employees they can apply for tax breaks of up to 35% (25% for non-profits) of the cost of their employees premiums. To qualify businesses must pay for at least 50 percent of their employee's premiums and their workers average annual wages can't be more than $50k. By 2014 the tax credit amount is increased to 50% (35% for non-profit).

Businesses with 10 or fewer employees and average annual wages of $20k or less are eligible for the full 35% credit between 2010 and 2013 and then a 50% tax credit beginning in 2014.

To learn more about the Obama Care register to the informative breakfast meeting on Thursday, August 8th by the Otay Mesa Chamber of Commerce. Even though the implementation of this program has been delayed, you need to be informed of the major impacts this new policy will have on your company, as well as the tax credits you might be able to obtain if you are a small company providing medical insurance to your employees.