Affordable Care Act Mine Field…Small Business Owners Watch Your Step

The Patient Protection and Affordable Care Acts of 2010…”Obamacare” to most, contains thousands of pages and its still emerging regulations add more thousands of pages, making it impossible for the avarage small business owner to cope with its effects on his/her business. If you are one of them, make sure you have access to a savvy CPA, HR Consultant, and attorney specializing in small business. No, you do not need to add them to your payroll, but you should seek them out and be ready to compensate them for their advice before installing, canceling or amending your group health insurance plan.

Notice I did not include a health insurance broker in the mix. You need a good one, preferrably one who has at least ten or twenty years insurance experience. But a good one will not attempt to charge you a fee, because his/her insurance company provides them service fees for bringing your business to them. Charging a fee on top of that would be unethical.

Daniel N. Kuperstein of Employee Benefits News published an on-line article on 4/20/15, titled The top 5 Affordable Care Act myths debunked. (
To summarize Mr. Kuperstein:

Myth No. 1: I have between 50-99 employees and don’t need to worry about anything under ACA for 2015.

Not true. Employers with between 50-99 full time employees including full time equivalents might be exempt from ACA’s pay-or-play penalties in 2015, but it is not automatic. To gain exemption in 2015 an employer must have averaged at least 50 but less than 100 full time employees (including full time equivalents, FTE’s) in 2014…cannot have reduced workforce size or overall workforce hours of service to satisfy ACA restrictions, unless for legitimate business reasons, and cannot have eliminated or materially downgraded the health insurance coverage they offer. Other ACA rules still apply, i.e., new employee health insurance benefits waiting periods must not exceed 90 days

Myth No. 2: Information reporting does not apply to me because I have between 50 to 99 full-time employees.

Employers with 50-99 full-time employees, including FTE’s, must complete information reporting for calendar year 2015, even if not subject to pay-or-play rules.

Myth No. 3: I can break my business into several different smaller entities, then avoid paying any ACA fines/penalties.

That is Not True. Doing so creates a “controlled group” as defined in the Income Tax Code and provides no refief from ACA rules. Different entities under common ownership or control are considered to be One Business under the Tax Code, and such business could be subject to ACA’s Pay or Play rules.

Myth No. 4: My group health insurance plan year starts in July, so no need to worry about what happened during January through June 2015.

Wrong Again. You must meet ACA rules/regulations during all months in 2015. Safe harbors are possible, but the rules/tests are complicated, and that is a good reason to review your situation with one or more of the experts mentioned in this article’s first paragraph above.

Myth No. 5: I can designate all my employees as “Part Time”, and even if they work more than 30 hours per week on average, avoid ACA’s penalties.

Not an option…designating them “Part Time” does not change anything. What counts is how many hours each works on-avarage each week during the year. Putting in 30 hour weeks/ 130 hour months makes your “Part Time” worker a Full Time employee, and the heavy hand of ACA will land on you.

Another myth not mentioned by Mr. Kuperstein is the idea that a small business employer can just drop the company’s group health insurance plan, then give each employee a raise to off-set the employee’s cost for buying his/her own personal/family health insurance policy. You can do it, but make certain your employee’s salary increase is not tied to a requirement that the increase be used to buy health insurance…otherwise you have created an employer sponsored health insurance plan and will be right back in the ACA hot seat. If your employee chooses to buy a new car instead of health insurance with the salary increase you will just have to live with it. Your schadenfreude moment will occur when that employee is forced to pay ACA’s tax penalty for not being covered by qualified health insurance during the calendar year.

Carpe Diem