Must an Employer Contribute to a Health Insurance Premium?
The Patient Protection and Affordable Care Act, also known colloquially as "Obamacare," makes many changes to the health insurance laws governing each state. The law does not require that employers provide health insurance to employees, but it does impose penalties on employers in certain instances. Understand the rules, as this will eventually affect your company as a business owner.
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Significance
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The Patient Protection and Affordable Care Act changes existing laws to allow your employees to obtain health insurance coverage through you at affordable rates or purchase insurance through an insurance exchange.
Effect
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When your employees buy insurance through you, you must either provide coverage for them or make coverage affordable for them. If you fail to do so, you will be assessed a penalty of $2,000 for every worker you employ in excess of 30. If your workers receive a tax credit for buying health insurance outside of your company through an insurance exchange, you will also be assessed a penalty.
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Benefit
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Your employees benefit primarily from the law because they receive insurance coverage either way, and the employee's dependents and spouse also are covered.
Disadvantage
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As an employer, you might be required to pay for health insurance premiums in excess of what you can afford. If you are already operating on slim profit margins or your profits are less than what you need to remain profitable long-term, then you might not be able to remain in business. Because the law imposes a penalty for not providing insurance, you will pay for your employees in one way or another.
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