The Monday Morning Quarterback

10 Things Every Business Owner Should Know Now About Health Care Reform

The Affordable Health Care Act includes a tanning booth tax of 10%. You know what this means? This whole thing could be funded by the cast of “Jersey Shore.” – Jay Leno

The United States Supreme Court affirmed the Affordable Care Act, which was signed into law by President Obama in 2010. American opinion is decidedly polarized; a recent poll revealed an even split between approval and disapproval of the Act. In any event, the Court’s decision allowed the immediate implementation (really a multi-year rollout) of the Act.

What this means for the advertising and marketing industry is that, come 2014, millions more Americans will be making personal decisions about buying health plans. That could be a boon for health insurance agents and the ad agencies that  represent them. I’ll be sure to cover that opportunity in future blogs.

What this means for business owners and workers right now is another matter. Small business owners and workers have simply not been well-informed on the Affordable Care Act and clearly have a lot of concerns.

There are important features of the Act that employers need to know about. In my recent research, here’s a list of ten things every employer should know now:

Individual mandate upheld. The U.S. Supreme Court issued a decision ruling that the mandate for every American to have health insurance is constitutional. This means that beginning in 2014, everyone will be required to have health insurance, either through a government-sponsored plan, their employer or by purchasing it individually. Those who choose not to carry insurance will have to pay a penalty of $95 or 1% of your income, whichever is greater. If in 2016 you still don’t have insurance, the amount increases to $695 per adult and $347 per child, up to $2,085 per family or 2.5% of your income, whichever is greater.

Tax credits for small employers. Employers with fewer than 25 employees and average annual wages of less than $50,000 may claim a tax credit for the cost of providing insurance which began with 2011 tax returns. There’s a terrific tax calculator you can use to determine your company’s eligibility by clicking here.

Dependent coverage. Health plans that cover dependents now have to cover dependents on a parent’s plan until their 26th birthday regardless of their student status. This applies both to new and existing plans.

W-2 reporting. Businesses with 250 employees or more in 2011 must begin to report on 2012 W-2s (issued January 2013), the aggregate value of health benefits provided to each employee including medical, dental and vision coverage. Employers with fewer than 250 employees fall under the requirement beginning with W-2s issued January 2014.

Health care premium use. For small employee and individual health insurance plans, at least 80% of all premium dollars collected are spent on health care services and health care quality improvement. (85% for large group plans).

Requirement to inform employees. Beginning in 2013, employers must provide each employee with written information on the employer health plan, health exchanges, available subsidies for insurance and guidelines about how to purchase insurance.

Simple cafeteria safe harbor. Beginning 2011, simple cafeteria plans for small businesses include a safe harbor from nondiscrimination requirements if the employer averaged 100 or fewer employees during either of the 2 years preceding 2011.

Employer play or pay. Beginning in 2014, employers with more than 50 employees will pay a per-employee penalty fee if they do not offer health coverage or if they offer coverage and at least one full-time employee receives a premium subsidy.

Tax on “Cadillac” plans. Beginning in 2018, there will be an excise tax on any “excess benefit” of employer-sponsored coverage. This is currently defined as more than $10,200 for individual coverage or more than $27,500 for family coverage.

Automatic enrollment. Employers with more than 200 employees must automatically enroll employees in employer-sponsored plans.

For more information on the Affordable Care Act, you should consult with your insurance broker, or visit

The information provided in this blog is only intended to be general summary information and is not intended to take the place of either the written law or regulations.  You should contact your insurance broker, insurance carrier, plan administrator or the California Department of Insurance at

– Art Reker, Account and Creative Executive