Small Business Health Insurance Requirements: Understanding New Laws

Small business health insurance requirements and the legislation around them can feel intimidating at first, especially as new laws and regulations are put in place. In response to the COVID-19 pandemic, the American Rescue Plan Act, or ARPA, was signed into law in March 2021. This sweeping piece of legislation aims to provide relief and support for individuals, businesses and local government. As a small business owner, you're impacted as well.

Most notably, it's important to pay attention to how small business requirements may change due to the Affordable Care Act, or ACA. Signed into law in 2010, the ACA was designed to expand healthcare coverage to more Americans—and ARPA broadens some of these provisions. Here are the changes you need to know.

Lower marketplace premiums

The ACA marketplace serves as a central location for consumers who don't have access to employer-sponsored health insurance. In a typical year, people can enroll from November to January.

One of the most significant changes ARPA has made to the ACA is a decrease in the price of health insurance in the marketplace. It was essentially designed to make plans more affordable across the board and offer more accessible coverage to those who couldn't previously pay for it.

Temporary increase of eligibility for subsidies

Primarily, marketplace premiums are more affordable because of a temporary expansion of subsidies. In this case, subsidies are funds provided by the government as a form of financial assistance on monthly insurance premiums to help make coverage more accessible. A recent study on ARPA found that 92% of those who buy insurance through the marketplace should now qualify for subsidies.

There previously was an income-cap restriction on who could qualify for subsidies. This cap has been removed through 2023. During this time, those who make above 400% of the federal poverty level—which is slightly more than $51,000 per year for an individual—and were previously ineligible will now be eligible for subsidies. Those who make between 100% and 400% of the federal poverty level will also see subsidy boosts.

Finally, the maximum amount anyone will pay for their insurance in the marketplace was lowered to 8.5% of their income.

ACA small business tax credits and reimbursements

The ACA has never mandated small businesses with fewer than 50 employees to provide health insurance coverage. However, if you decide to offer employer-sponsored insurance, you may qualify for tax credits. These credits could cover up to 50% of your employees' premiums.

You may qualify if:

• You have fewer than 25 full-time (or full-time equivalent) employees. Seasonal employees are not covered, even if they work full time during the season.
• Employees' average salary is approximately $50,000 or less per year.
• You pay at least 50% of your full-time employees' premiums.

If you meet these qualifications, you may want to explore the Small Business Health Options Program, or SHOP, to learn more about the tax credits that could be available.

Staying up to date

It's always important to keep an eye out for any new small business health insurance requirements so you can more easily determine how they'll impact you and your employees. Staying ahead of the curve can help ensure your business continues to run smoothly, and you'll have what you need to build the health plan that works best for everyone.