In just a few weeks the open enrollment period for the Patient Protection and Affordable Care Act, otherwise known as the Affordable Care Act (ACA) or Obamacare will come to an end. In the months and days leading up to this deadline much has been discussed regarding how small businesses would be affected by the ACA, Much of the discussion gets confusing depending on the size of the small business. Small businesses that have 50 or more employees are mandated to provide insurance for all full time workers while small businesses that have 25 or less employees are being offered tax credits based on the number of full time employees they have and their average annual salary.
The determining factor of where a small business falls under the Affordable Care Act is where a lot of the confusion lay. As is shown above there is a differentiation on how businesses that have 50 or more employees deal with the ACA versus those that have 25 or less employees. What’s not mentioned is how small businesses that do not fall into either of those categories should deal with the ACA. One of the grossly misrepresented in this discussion are those businesses that are run by a single individual, the self-employed.
The premise of the ACA is to extend insurance coverage to all Americans and reduce the future cost curve of healthcare insurance. This is done by offering subsidies and tax credits to businesses. When it comes to being a self-employed business owner taking advantage of such benefits isn’t as easy as it would seem.
Determining if a self-employed individual can take advantage of the subsidies offered can be daunting. Since self-employed income can change month to month and year to year it is difficult to determine if the individual should even claim a subsidy. Although the Healthcare.Gov website provides instructions on how to estimate income it doesn’t go into detail about what to do with income fluctuations. If it is decided that a subsidy will be taken to lower the cost of the health care insurance it is the responsibility of the self-employed individual to ensure that the government be notified on any monthly income change. This unpredictability can result in an individual having to reimburse the government for any subsidies should their income be higher than what was used to determine the monthly cost of their health insurance. Bottom line it’s the onus of the self-employed individual to determine the subsidy amount to be applied and when to notify the government to any changes that may need to be made to it.
It is unfortunate that a group that plays a big factor in our economy, such as the self-employed, are hugely ignored in the ACA discussions. Our policymakers need to realize small business is not one size fits all entity. They need to stop referring to a business as small when discussing those businesses that contain upwards of 250+ employees. When lumping a self-employed business into this group those that own these types of businesses are done a disservice.
Are you self-employed? If so how has this whole ACA discussion affected you and your business? Let us know in the comment section below.
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