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Five Biggest ACA Concerns for Small Business Owners

Date: 7/22/2016

As of January 1st, 2016, small businesses are required to conform to the Affordable Care Act Employer Mandate. The launch of the act in 2014 for large businesses was notoriously problematic and now that its effects are being felt in the small business world, there are even more misunderstandings. The below are five of the biggest concerns small business owners are facing with this new regulation:

As an employer, how do I know if I need to comply? – “Play or Pay” Mandate:

If you are an applicable large employer (ALE) and have 50 or more regular full-time employees and/or full-time equivalent employees (FTEs), you are required to offer health insurance that is both affordable and meets minimum value under the new law or be subject to penalties.

So what defines a full-time equivalent employee? FTE employees are a combination of part-time, variable hour or seasonal employees who work more than four months in a year (120 days). They are determined by taking the total hours worked in a month for those working less than 30 hours per week, and dividing by 120. The total number of full-time and full-time equivalent employees are then combined to determine if the employer mandate applies.

Employer Mandate: Minimum Value and Affordability:

Minimum value requires the plan to pay at least 60% of the cost of covered services. Plans that do not provide the minimum value, or are not affordable, will result in penalties equal to the lesser of $3,240 per full-time employee receiving a subsidy, or $2,160 per full-time employee (minus the first 30). In 2016, in order for the coverage to meet affordability guidelines, it cannot exceed 9.66% of the employee’s household income.

Premium Tax Credits for employee subsidized insurance could mean significant penalties for an employer:

If you do not offer coverage and have 50 or more full-time employees and/or full-time equivalent employees (FTEs), and even one of your employees receives subsidized insurance through the marketplace, you could incur a penalty of $2,160 per full-time employee (minus the first 30).

So what happens if you do offer coverage? If an employer does offer coverage, but the coverage does not meet minimum value or is unaffordable, the employer is still subject to a penalty equal to the lesser of $3,240 per full-time employee receiving a subsidy, or $2,160 per full-time employee (minus the first 30). If an employee receiving a subsidized plan was offered affordable insurance, you can appeal the fines, but your response time is limited!

Not understanding what constitutes a full-time equivalent employee:

Under the new law, compliance requires that you know how to calculate variable hours, part-time and seasonal employees that need to be counted as part of the full time employee population. FTE’s need to be tracked each month and included in the total employee headcount to determine ALE status.

Not taking advantage of tax credit:

If you have fewer than 25 full-time employees, and you offer health coverage to your employees, you may qualify for a tax credit of up to 50% of premiums paid.

After reading about some of the rules and regulations associated with ACA, do you feel as if your business is equipped to handle this HR compliance obstacle course? Outsourcing your HR needs can be the best solution to a tough situation. Doing so frees up your schedule, or another employees’, and provides you the comfort of knowing that your administrative burdens are being taken care of by a staff of professionals.

AlphaStaff, a national HR outsourcing company, has been working with storage owners for several years. The company even has a business unit that specializes in assisting storage entrepreneurs, led by a dedicated business development manager who understands the needs of the storage industry. While AlphaStaff manages everything from HR related compliance to the implementation of payroll and healthcare solutions, storage owners everywhere can finally find the time to focus on their core business. For more information on AlphaStaff’s services, please reach out to our Vice President of Strategic Business Development, Jeniece Carter-Henson, at or at (727)365.6722.

About the Authors:

Kim Lowe, Director of Agency, first joined AlphaStaff in 2013 and again in December 2014. In this role, Ms. Lowe oversees the health benefits agency AlphaStaff MGA. Ms. Lowe has over 20 years of experience in benefits on both the carrier and consulting side of the industry. Prior to joining AlphaStaff, Kim was an AVP/Practice Account Manager at Aon Hewitt, worked with Cigna and John Alden Life, and was the owner of her own benefits consulting firm.

Jeniece Carter-Henson, Vice President of Strategic Business Development, joined AlphaStaff in August 2011. In this role, Jeniece. Ms. Carter-Henson leads the continuing the expansion of AlphaStaff's Self Storage Division, while also being a member of the Key Account Team which focuses on clients with 500 employees or more with a complex application for consultative solutions. Jeneice holds 20 plus years of experience within PEO, having built PEO sales divisions within the industry of sales broker channel distribution, and 15 plus years of executive sales leadership experience.

NOTE: The information contained in this article is not legal advice or a substitute for legal counsel.

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