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Home : Consumers : Health care reform : Businesses
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Businesses
The Insurance Department is analyzing information to provide North Dakota's business owners with unbiased resources concerning the new health reform law. Many details are not yet available, so as the Department learns more, this website section will change.
Please come back to read more about how the new law will affect you. If you have a question that is not answered here, feel free to contact us at 1-800-247-0560 or insurance@nd.gov.
I own a small business. Will I have to buy insurance for my workers? What help can I get?
It depends on the size of your firm. Companies with fewer than 50 workers won't face any penalties if they don't offer insurance. Companies can get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35 percent of the cost of premiums became available in 2010 and will reach 50 percent in 2014. The full credits are for the smallest firms with low-wage workers; the subsidies shrink as companies' workforces and average wages rise. Beginning in 2014, firms with more than 50 employees that do not offer coverage will have to pay a fee of up to $2,000 per full-time employee if any of their workers get government-subsidized insurance coverage in the exchanges. The first 30 workers will be excluded from the assessment.1
How does the small business tax credit work?
The new federal health reform law provides a Small Business Tax Credit to businesses for contributing toward their workers' health premiums, beginning with the 2010 tax year. The credit applies to all amounts paid or incurred in taxable years beginning after Dec. 31, 2009.
Businesses with fewer than 25 full-time equivalent employees (FTE) and average annual wages less than $50,000 per employee qualify for the credit. To receive the tax credit, an employer must have a group health plan and must pay at least 50 percent of the premium.
The tax credit is not available for coverage for working owners (sole proprietors, partners, 5 percent shareholders, 2 percent shareholders of S corporations) and their immediate families. Coverage for seasonal workers who work 120 or fewer days is not eligible for this tax credit.2
How much is the small business tax credit?
The tax credit is a percentage of what the employer pays and is based on the average premium in the small group market in the state. The U.S. Department of Health and Human Services is required to determine the average premium for each state or region.
For tax years 2010 through 2013, the maximum credit in each year is 35 percent of the employer's contributions (25 percent for nonprofit employers).
Beginning tax year 2014, the maximum credit is 50 percent of the employer's contribution (35 percent for nonprofit employers). A business may receive two years of up to 50 percent tax credits. The two years of 50 percent credit is in addition to any credit the employer might have received for tax years 2010 through 2013.2
How do businesses claim the tax credit?
The Small Business Health Insurance Tax Credit is part of the "general business credit," which reduces the income taxes a business owes. If the credit is more than taxes owed, the unused credit can be carried forward or back to other years that a business has a tax liability. Tax-exempt small businesses may apply the credit to their payroll taxes.2
For more information, visit: http://www.irs.gov/newsroom/article/0,,id=220848,00.html?portlet=7
I have 5 employees. Will I be required to provide insurance for my employees?
No. The employer responsibilities under the health reform law do not apply to employers with fewer than 50 employees. However, you will be able to enroll your employees in coverage through the Exchanges beginning in 2014.3
I have 75 employees. Will I be required to provide insurance for my employees?
Yes. An employer that fails to offer minimum essential coverage to its employees will be subject to a penalty of $2,000 for each of their employees beyond the first 30 (effective 2014). In your case, this penalty would be $2,000 x (75-30) = $90,000. If an employee's share of the premium for coverage provided by an employer exceeds 9.5% of his or her household income, employers that do offer minimum essential coverage will be assessed a penalty of $3,000 per employee that receives a subsidy through the Exchange. This penalty may not exceed $2,000 times the number of employees beyond the first 30.3
I am self-employed. Will the new law impact my health insurance choices?
Yes. Beginning Jan. 1, 2014, self-employed individuals and their families must be included in the small group market in all states and will have the option of purchasing coverage through the Exchange. 3
Sources:
1 Kaiser Health News
2 Maine Bureau of Insurance
3 National Association of Insurance Commissioners
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