Effective January 1, 2014, everyone will have healthcare…in theory. The new mandate helps many people who don’t have healthcare and need healthcare. But for those that have healthcare or own small/large businesses, the new mandate comes with hefty changes and possibly increased costs or penalties if not properly followed.
Similar to other types of new legislation, figuring out how changes will impact your business is half the battle. NARI’s Webinar, “Healthcare Mandate: What’s Next Webinar” aired on September 7, 2012, and covered health-care reform updates from the federal level, emerging trends and valid strategies for business compliance. This Webinar is archived at www.nari.org/learning.
The most significant distinction in the health-care mandate is the division of big businesses from small businesses. The majority of NARI membership falls under the small business category, which includes companies with 1 to 50 employees. Even though most NARI members are not mandated to offer their employees insurance, when small companies choose to cover employees, some other obligations attach under the health-care reform law. Therefore, it is important that requirements for big/small companies are revealed, as many NARI companies will be dealing with them. NARI’s four-part series provides an overview of the healthcare mandate and important details.
Business owners employing less than 50 full-time employees (defined as working 30+ hours on average per week) are not required by law to provide employees with health insurance. The decision is up to the owners of the company if they want to provide a group health plan to their employees.
If employers choose to not provide health coverage for their employees, individuals are still required to have coverage under the mandate or face penalties. Individuals who cannot afford coverage will be subsidized based on household income and number of dependents in a household.
The largest issue that small companies will face is whether the group is really under 50 employees. Full-time employees are counted, as well as the hours of the part-time workers, to come up with so-called “full-time equivalent” employees. So, even if an employer may reduce the number of full-time employees below 50 but increase the number of part-time employees or their hours, that employer may be treated as if it has over 50 full-time employees. If the government proves that the hours worked by part-time employees is equal to enough full-employees to raise the total count to more than 50, that company will be held accountable for coverage.
In remodeling, many small business owners hire seasonally or hire subcontractors. If the subcontractors work for an independent firm or are a sole proprietor, they do not run the risk of falling under a remodeler’s coverage. The best way to determine if a person is considered an employee is by using the IRS 20 point test . The good news is that there is a little leeway for business owners who hire seasonal employees; under the new IRS measurement period rules, the business will have one year to determine if the hours of that employee constitute a full-time employee. Once the employee becomes full time, employers have a brief time frame, generally under 90 days, to offer them coverage under the group health plan.
Read The Essential Plan for details on coverage under the healthcare mandate.