Effective immediately, the Affordable Care Act helps small businesses of up to 100 employees cover the cost of providing health insurance for full-time employees and their families. Beginning in 2014, individual states will be responsible for setting up small business insurance exchanges, where small businesses can band together to buy lower cost insurance plans.
Small businesses with fewer than 50 employees will not be penalized for not providing employees with insurance. Businesses with over 50 employees that don’t provide insurance will be penalized if one or more of their employees depends on government subsidies to obtain health insurance. The penalties are up to $2000 per full-time employee, not including the first thirty employees.
Very Small Businesses and Subsidies for Health Care
Small businesses with 25 employees or less and an average pay of up to $40,000 are eligible to receive tax credits of up to 35% of the cost of the premium for providing their employees with insurance. By 2014, the tax credits will amount to 50% of the premiums paid to cover workers. The tax credits received decrease as the business size and average income increases, so companies with fewer employees getting paid lower wages receive higher tax credits.
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