When the subject of franchises and the Affordable Care Act (ACA), or Obamacare, comes up, a lot of confusion about its requirements seem to materialize along with it. During this week’s blog edition, we’re going to attempt to cut through all of the clutter and provide factual data for consideration. And to do this, we’re going to an unbiased and reliable source—the U.S. Small Business Administration (SBA).
The SBA has dedicated a portion of their website to addressing the Affordable Care Act and what it means to small businesses—a category almost all franchises fit into. According to their information, the ACA affects small businesses in four distinct classifications:
- Self Employed
- Employers with fewer than 25 employees (most franchisee operations)
- Employers with up to 50 employees
- Employers with more than 50 employees
Here’s a quick breakdown of the facts directly from the SBA concerning each category:
Each individual must have basic health insurance coverage (known as minimum essential coverage), qualify for an exemption, or pay a fee when filing a federal income tax return. Individuals will not have to pay the fee (also known as an individual shared responsibility payment) if coverage is unaffordable, if they spend less than three consecutive months without coverage, or if they qualify for an exemption for several other reasons, including hardship and religious beliefs.
Fewer than 25 Employees
First and foremost, there is a tax credit available to franchised operations if they qualify by having a majority of employees who earn a low to moderate income (average annual wages of $50,000 or less). Coverage for employees can be provided through the small business health options program (SHOP), a health insurance marketplace. As a franchise owner, you may not need to provide direct coverage if you reimburse individual employees that have their own plans. As a small business owner, you can even qualify for a 20-30 percent savings if you institute a health wellness program of your own.
Employers with up to 50 Employees
Requirements for this category are almost identical to the under 25 employee category, including access to the SHOP program. However employers with 50 or more staff are required to provide their workers with a standard “Summary of Benefits and Coverage” (SBC) form explaining what their plan covers and what it costs. The purpose of the SBC form is to help employees better understand and evaluate their health insurance options.
50 or more Employees
This category includes a provision mandating employer shared responsibility. What this means is that if employers do not offer health insurance to their full-time employees (those working 30+ hours/week) and their dependents, or they offer coverage that is not affordable or that does not provide minimum value, they may be required to pay an assessment if at least one of their full-time employees receives a premium tax credit to purchase coverage in the new individual marketplace. They also must file a report with the IRS indicating the type of coverage they offer employees and other compliance information, which took effect this year.
We understand that many Americans have strong opinions about the Affordable Care Act, one way or the other. It represents some vast changes in the way that health insurance is provided, paid for and distributed. What we urge is that individual business owners and franchise brand executives do their own due diligence in understanding the requirements for each business category based on the number of employees they engage.
In the process of working to understand your business more thoroughly, you’ll want to know which existing and potential franchisees best fit your business concept. Proven Match is the proven solution in determining those factors. Through our proven behavioral assessment techniques, predictive analysis becomes predictive success for your franchise concept. If you’re ready to show your leadership by getting started, give us a call and we’ll put you on the path to a more productive year in 2016.