ObamaCare: CA Small Business
Small businesses in California will use SHOP (Small Business Healthcare Option Program) to offer health insurance to their employees. SHOP is only for employers with 50 employees or less. Click here for information about the Affordable Care Act for businesses with more than 50 employees. Click here to see how individual ObamaCare metal plans work: Compare Bronze plan, Silver Plan, Gold Plan, and Platinum Plan.
California Small Business Differs from IRS Requirement
According to Covered California, the appointed Health Insurance Marketplace, if an employer chooses to purchase insurance through SHOP, the employer must offer their employees benefits with a minimum of 70% coverage (Silver plan). This is important to note, because the IRS only mandates that businesses offer plans with a minimum of 60% coverage (Bronze plan).
CA Small Business 2014 Details
- Tax credits up to 50% of employer’s premium cost for those with less than 25 employees**
- Not mandated to offer coverage
- Do not have to offer coverage to dependents
- 1099 employees are not eligible
- Sole Proprietors purchase from individual market not SHOP
**Employees must have an average base salary of $50,000 or less, and employers must pay a minimum 50% of the premium contribution to qualify. Employers with 10 or fewer employees qualify for the highest tax credit. Employers will be eligible for this tax credit for two years.
All Employers Must Notify Employees of Changes by October 1, 2013
Whether or not your business is offering insurance it is required by the Affordable Care Act that employers provide notification no later than October 1 2013. Each new employee must be given this notification at the time of hire after October 1, 2013 (time of hire in 2014 is considered within the first 14 days of an employee’s start date). You are not responsible to give this notice to a dependent of your employee.
The following are the two notices provided by the Department of Labor:
Additional CA Employer Responsibilities
- Provide employees with a Summary of Benefits and Coverage for their plans
- Make a report for the IRS for all full-time employees coverage
- According to the 80/20 Rule, if an employer receives a rebate from a provider, and that rebate is considered an asset, it is at the employer’s discretion for “a reasonable and fair allocation of the rebate”
- Employers must provide employees, on their W-2, with a breakdown of the employer’s contribution and the employee’s contribution***
- Employer is responsible to add a Medicare Part A tax increase to those employees who make over $200,000 a year (there is no increase in your tax contribution)****
- Employers must provide health insurance to an employee within 90 days of their start date (including weekends and holidays)
***Employers do not need to provide this to retirees. “And the value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable.”
****Speak with your tax consultant on how this works.
CA Employer Assistance
For any questions regarding your CA business and ObamaCare call 800-930-7956 or contact Medicoverage for assistance.