Insurance · May 13, 2021

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, too.

Most notably, it's important to pay attention to how, due to the Affordable Care Act, or ACA, small business requirements might change. Signed into law in 2010, the ACA was designed to expand healthcare coverage to more Americans. This new law, ARPA, further broadens some of those provisions. Here's what you need to know as the law gets implemented in the coming months.

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 between November through January. Since the passage of this new law, however, a special enrollment period extends through August 15, 2021.

One of the most significant changes ARPA has made to the ACA is a decrease in the price of health insurance on the marketplace by an average of $50 per person per month and $85 per policy per month according to the US Department of Health and Human Services. It was 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

A big reason why marketplace premiums are more affordable is due to 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.

Previously, there was an income cap restriction on who could qualify for subsidies. For the next two years, that cap has been removed. Those who make above 400% of the federal poverty level, which is slightly more than $51,000 a 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 on 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 do decide to offer employer-sponsored insurance, you may qualify for tax credits. These credits could cover up to 50% of your employee's 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 employee's 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.

ARPA also expanded paid family leave to make it easier for employees to keep on top of their healthcare during COVID-19. The Families First Coronavirus Response Act originally expired on December 31, 2020. However, as part of ARPA, it will reimburse employers, up to $12,000, who voluntarily pay sick and family leaves related to COVID-19 from April 1, 2021 through September 30, 2021. Coverage includes those waiting for results from a COVID-19 test or diagnosis, those recovering from a COVID-19-related illness and those getting vaccinations. If you're worried about employee exposure, and they need to quarantine before returning to the workplace, these provisions can help reimburse you for that.

Staying up to date

It's always important to keep an eye out regarding small business health insurance requirements—but especially so in the coming years. That way, as the laws that determine these requirements change, you'll know how it may impact your business and 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 you.


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