In 2014, healthcare is going to change. The change is going to affect many businesses, both large and small. For startups, small businesses and the self-employed, these changes can be significant. Ignore the coming changes and it could cost you thousands in fines. Manage these changes right and you can save both yourself and your employees a lot of time and money.
Here’s what you need to know about the coming healthcare changes.
The Self-Employment Policy
The government considers you self-employed if you employ nobody else but yourself or your partners. If you’re a sole proprietor, that generally just means you. If you have a general partnership, or an LLC owned by multiple people who work on equity, your partners most likely won’t be considered employees. Contractors don’t count as employees, though extended contracts might.
For more details on how the IRS defines “employee,” see this article.
If you’re self-employed, you’re required to purchase insurance. Healthcare.gov recommends using their individual health insurance Marketplace, which helps facilitate better deals for individual buyers.
Penalties for Not Getting Insurance
The government will put everyone into one of three categories:
- At or below the poverty line. You’re not required to purchase insurance. You may qualify for Medicaid.
- Above poverty level, but eligible for subsidies. You’re still required to purchase insurance, but the government will help cover part of the costs.
- Everybody else. You’re required to purchase insurance.
The penalty for not purchasing insurance is 1% of your income, or $95, whichever is higher. In 2015 the penalty goes up to 2%, then 2.5% in 2016. In other words, by 2016, if you’re earning $100,000 a year, not getting insurance will cost you $2,500.
As of 2014, healthcare providers will no longer be able to deny you or your employees coverage based on pre-existing conditions. They won’t be able to charge higher rates because of pre-existing conditions. In fact, they can’t even use pre-existing conditions as a qualifying question when determining your coverage.
What Startups and Small Businesses Need to Know
Small businesses and startups should pay careful attention to the coming changes, as they can really affect the bottom line.
If you’re a small business with fewer than 25 employees, you may qualify for a tax credit. The credit can cover as much as half of your insurance premiums. To see if you qualify, click here.
As long as you have under 50 employees, you can buy insurance on the Small Business Health Options Program (SHOP) website run by Healthcare.gov. You can see plans and options here.
Businesses with more than 50 employees will now be required to offer healthcare or pay a $2,000 a year fee per employee.
As you can see, healthcare is going through a big shift right now. For many employers, healthcare is one of their biggest expenses. If you’re going to be affected by these changes on January 1st, now’s the time to start planning for it.