Retirement plan sponsors are the first, and most important, line of defense in providing employees with well-managed retirement savings plans.
Things in the health care benefits arena have changed drastically over the last couple of years with the passage of the Affordable Care Act (ACA). If you're a small business owner, this may or may not affect you and your employees in a big way.
Here's a quick breakdown of the Small Business Health Options (SHOP) rules:
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Small employers with up to 100 employees will be eligible to participate in the SHOP. However, until 2016, states may limit participation to business with up to 50 full-time equivalent (FTE) employees
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Small employers must elect to offer, at a minimum, all full-time employees coverage ina qualified health plan through a SHOP
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Small employers must have its primary office in the Exchange service area and offer all its employees coverage through that SHOP, or offer coverage to each eligible employee through the SHOP servicing the employee’s primary worksite
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You are required to provide coverage to your employees' children, up to age 26
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Your employees are required to carry health insurance—either from you, their employer, or through a private policy—or be subject to fines
The fact of the matter is, providing health care for your employees is a costly business expense, but it is also non-negotiable. Not only can it cost you in the form of penalties if you don't provide coverage—$2,000 for each full-time employee, on average—but it could also deter top-notch employees from building their career with you. Employee turnover can also be very costly. Not only does it cost actual dollars to recruit, interview, and train replacement employees, but it costs you and/or your hiring staff time and productivity.
Related reading: How to Reduce Costs Without Sacrificing the Health Care Benefits You Provide
In 2014, according to NFIB, small businesses paid $6,025, on average, per employee, for single coverage premiums. That's quite a price tag, right? Here's some good news: if you provide your employees with health benefits, you have the opportunity to make some pretty substantial tax deductions.
The Small Business Health Tax Credit can give a tax credit of up to 50% on premiums paid for small business employers and 35% for small tax-exempt employers. Here are the qualifications:
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You have less fewer 25 full-time equivalent employees (FTEs)
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Your employees' average annual wage is less than $51,600 (2015)
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You pay at least half of your employees' health insurance premiums
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The coverage you offer is purchased through the SHOP Marketplace
In addition, as a small business owner who is ultimately responsible for your own health insurance coverage, you are also eligible to deduct 100% of your monthly health insurance premiums, as well as dental and long-term care benefits for you and your dependents. Likewise, Health Savings Accounts (HSA) have long since been a tax-saving option for Americans enrolled in high-deductible health plans. With a qualified high deductible plan, you can open an HSA and make pre-tax contributions to pay for approved medical expenses. According to HSA Center, the contribution maximum for 2015 is $3,350 for individuals and $6,650 for families. For 2016, the contribution limits are $3,350 for individuals and $6,750 for families.
Dealing with the ramifications and continuous changes of ACA can be overwhelming, especially for small business owners that are working with limited time, limited knowledge of the law, and limited resources. In fact, less than 22% of small business owners believe they are "very familiar" with ACA, according to the NFIB.
A professional benefits consultant can help you get a better grasp of the requirements, your legal roles and responsibilities, and cost-saving steps you can take!
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