As a business owner, you want to keep your health care costs as low as you can. You also want to take advantage of whatever tax breaks you can. With the Affordable Care Act (ACA), your company can do both.
What’s important is to set up your ACA business planning so that you get the best financial situation possible, while also giving your employees top-notch benefits that will help make their lives better.
Here are some ACA business planning strategies:
Know Your Number of Full-Time Equivalent Employees (FTEs)
If you want to take advantage of ACA tax benefits, you’ll be looking at having a Small Business Health Options Program (SHOP) plan. These plans are generally the only way to get the Small Business Health Care Tax Credit and lower your premium costs.
From there, you can determine what plans you want to offer to your full-time employees, and whether you want to offer coverage to part-time employees.
Cover the Appropriate Costs
To be eligible for the small business health care tax credit, you have to meet three additional requirements:
- Cover at least 50 percent of employees’ premium costs
- Have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000
- Purchase their coverage through the Small Business Health Options Program (SHOP)
If you qualify, you can gain a maximum credit of 50 percent of premiums paid (35 percent if you’re a tax-exempt employer). This credit is available for two consecutive taxable years.
Other Ways to Manage Healthcare Costs
Other than taking advantage of tax credits and avoiding penalty payments, how else can you manage your health care costs? You may feel like your hands are tied, but small steps can make a big difference. Here are two ideas:
Negotiate Your Premium
If you’re over 50 FTEs and don’t qualify for SHOP, you might think you’re stuck with whatever premium your broker can find. The good news is, you can negotiate your premium. Maybe a claimant left the company, or you have new wellness programs. There are almost always factors you can point to as a reason for the insurer to charge you less.
You can also join a purchasing cooperative, which allows you to join other small businesses to gain bargaining power. You may be able to get lower costs or have a chance to offer additional perks to your employees.
Offer Wellness Programs
Wellness programs have many benefits. Any time you can improve the health of your staff, you’ll not only save on health care costs, but also gain morale.
Wellness programs can be physical health incentives, financial wellness programs that reduce stress and help employees handle life better, or even money toward a gym membership.
Better employee wellness reduces absenteeism, lowers your costs, and helps employees do their best work.
Offering high-quality health insurance is a great way to attract and retain top-level talent. With careful planning, you can take advantage of tax credits and avoid penalties.