The Affordable Care Act Leaves Big Decisions for Small Business Owners
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ST. LOUIS (KMOX) – As of Monday, only half a year remains until new mandates under the Affordable Care Act go into effect.
The choice facing businesses with 50 or more full-time employees is whether to institute a health care plan for workers by January 1st or pay a federal penalty.
Tom Mug, with the Greensfelder Hemker & Gale law firm, has been helping small business owners determine which choice is the most financially feasible for them.
“Part of it is through a numerical analysis, what is the potential penalty, what is the cost of providing the insurance and then there’s other factors that enter into the decision,” Mug says.
He says the formula to determine the federal penalty is the number of full-time employees, minus 30 and then multiplied by $2,000. So, a company with 100 full-time employees would owe $140,000, according to Mug.
Mug says, if the business owner determines that it would cost even more to provide health care plans for the workers, then it might make financial sense to pay the penalty. He says, however, one factor for owners to keep in mind is that health care plans are deductible, while the federal penalty is not.