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Obamacare Simplified: Health Insurance Reform 2013

Barack Obama signed the Affordable Care Act into law in 2010. This health insurance reform will have a significant impact on small business owners, as it contains several provisions regarding employee health coverage. If you need to follow the law, this Obamacare simplified guide will help you learn more about how it will affect your company. Failing to understand the provisions of this law could affect your bottom line and leave you vulnerable to legal action.

Health Insurance Reform Benefits

Legal compliance is an important aspect of running any business, as running afoul of this law can get your company in trouble with the federal government. Under Obamacare, any business that has at least 50 full-time employees must provide health coverage for employees who work 30 or more hours each week. Simplified, this means that you will have to pay a penalty if you have at least 50 employees and do not provide the required health coverage. The penalty amounts to $2,000 per employee after the first 30 workers. For example, if you have 50 employees but don’t offer healthcare, your penalty would be $40,000 — 20 employees multiplied by $2,000.

Analysts expect that some companies would actually prefer to pay the penalty rather than provide the required health coverage to their employees. Other analysts expect that employers will reduce the number of full-time positions in their companies, so that they have fewer than 50 full-time employees. That way they would not be required to provide employee health coverage.

Technology Drives Health Care Reform Savings

The Affordable Care Act will also affect how you use technology in your human resources department. If you are reviewing information about Obamacare here are a few things to help you understand the tax issues associated with this law.

Employers who provide health insurance for fewer than 25 employees may qualify for a tax credit to help offset the costs. In 2013, this tax credit is 35 percent of the cost of the insurance for businesses. In 2014, the credit will increase to 50 percent. This is one of the positive effects that Obama healthcare reform will have on small businesses. Because you need to be able to provide proof of coverage for your employees, it is important to document the type of coverage and the amount of money paid for each employee's insurance premium. If your insurance company sends paper bills instead of electronic ones, use a scanner to save these statements to your hard drive. This will make it easy to access when you file your taxes.

Pitfalls of Obamacare

The cost of meeting the mandates outlined in this law will depend on the health plan you select. Some employers will choose catastrophic health insurance plans to meet the rules of Obamacare. This means that employees will have to pay high deductibles in exchange for lower insurance premiums. The National Federation of Independent Businesses estimates that the average health premium for small businesses is $4,260 per year for individual policies and $11,100 per year for family policies. If your company has 50 employees, meeting the provisions of this act may cost you anywhere between $213,000 and $555,000 per year, depending on the number of individual and family policies you purchase.

The complex language of the law makes it difficult to understand the provisions of Obamacare. Simplified rules will help you understand what you must do to meet the requirements of the Affordable Care Act. This Obama healthcare reform may cost your business a significant amount of money, but it may also help you qualify for additional tax credits. Consider investing in an updated tax guide to gain a deeper understanding of Obamacare, simplified tax rules and other topics that affect your business.

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