ObamaCare Impact on Small Business

ObamaCare is forcing small businesses to potentially change the way they provide benefits for their employees.  Although the financial impact on large businesses appears far greater, the ObamaCare impact on small businesses could be very costly.

ObamaCare’s Definition of Small Business

The ObamaCare legislation defines a small business as any business with less than 50 full-time equivalent employees. For example, a restaurant with 12 full-time employees and 65 part-time employees qualifies as a small business.

Five Areas of Impact

Here are five key areas that ObamaCare impacts a small business.

1. Changes in W-2 reporting requirements.  Employers must now provide a calculation of the cost of benefits coverage for each employee.  Obviously the amount of time now required to properly complete the additional calculations and paperwork will be exponential.
2. New deductible maximum change. Beginning in 2014, businesses are not permitted to sponsor benefits plans with a deductible higher than $2,000 per employee. Small businesses that choose large deductible plans will be forced to pass along the higher costs to their coverage to their employees.
3. Summary of benefits requirement. The summary of benefits is a document prepared for each employee specifying a breakdown of their individual current benefits and future options for the upcoming plan year. Obviously, this will create a significant increase in the amount of paperwork that companies will be required to prepare every year.
4. Reduction in waiting periods. As of 2014, employers are required to offer coverage after 90 days of employment. The will be an additional cost burden to many employers.
5. Cap on Flexible Spending Account (FSA).  The maximum any employer can fund this account is now only $2,500. This creates additional burdens on both the employer and the employee.

Positive ObamaCare Impact upon Small Business

In 2014, the tax credit given to small businesses for premium payments will be increased. That is a great incentive for small businesses to continue their employee benefits coverage.