Information for Small Businesses
The small group market for health insurance coverage includes small employers with 2-50 employees.* Individuals that are self-employed or have no employees are generally not able to purchase coverage in the small group market, but may access coverage in the individual market.
*Beginning in 2016, the Affordable Care Act will expand the definition of the small group market. Under federal law, businesses with 51 to 100 employees ("mid-size businesses") will join the small group marketplace, which currently is defined as businesses with 50 or fewer employees. This means that any mid-size business that seeks to purchase new health insurance coverage for its employees will be required to purchase coverage through the small group health insurance market.
Mid-sized businesses that currently have coverage in place may have the option to renew their existing coverage under transitional rules adopted by the South Carolina Department of Insurance under Bulletin 2014-05.
Coverage Options for Small Businesses
Small businesses have the option of purchasing coverage in the private marketplace or through the small group health insurance exchange called the Small Business Health Options Program or "SHOP."
Private Market: In the private market, businesses purchase health insurance just as they always have - typically, coverage is purchased through an agent, but it can also be purchased directly from a small group health insurance issuer. The contact information for every health insurance issuer currently writing small group coverage is available by clicking here.
SHOP: The Small Business Health Options Program (SHOP) is the name of the small group health insurance exchange that the federal government established in South Carolina. Small employers that purchase health insurance through the SHOP may be eligible for federal tax credits under federal eligibility criteria. For more information, please visit healthcare.gov/small-businesses/ or call the SHOP call center, 1 (800) 706-7893, which is available Monday through Friday from 9:00 a.m. to 7:00 p.m.Federal Tax Credits for Small Businesses
If you (1) have fewer than 25 full-time equivalent employees; (2) pay employees an average annual wage that's less than $50,000; and (3) pay at least half of your employees' health insurance premiums, you may qualify for a federal tax credit to offset the cost of your insurance.
The Health Care Tax Credit for small businesses has been available since 2010. Beginning in 2014, the federal tax credit was increased from a maximum of 35% to up to 50% of your contribution toward employees' premium costs (up to 35% for tax-exempt employers). However, the enhanced tax credit is only available for small employers that purchase coverage through the SHOP.
Helpful Tip: Visit the SHOP website's Tax Credit Estimator to find out the amount of the tax credit your small business may qualify for.
Employer Shared Responsibility Provisions (aka "Employer Mandate")
The Affordable Care Act includes a penalty that is imposed on certain employers if they don't provide health insurance coverage to employees and their dependents. This is officially entitled the Employer Shared Responsibility Payment, but is sometimes referred to as the employer mandate.
"Beginning in 2015, those employers with 100 or more full-time or full-time equivalent employees who do not offer affordable health insurance that provides minimum value to their full-time employees (and dependents) may be required to pay an assessment if at least one of their full-time employees is certified to receive a Premium Tax Credit in the individual Health Insurance Marketplace. Under these rules, a full-time employee is one who is employed an average of at least 30 hours per week. For employers with 50-99 full time/full-time equivalent employees, these rules will not apply until 2016 provided employers of this size meet certain certification requirements." (Source: SBA.Gov)
Questions & Answers: Employer Shared Responsibility Provisions Under the ACA (IRS)
Final Regulation: Shared Responsibility for Employers Regarding Health Coverage (IRS and U.S. Department of Treasury, Feb. 10, 2014)
Definitions and Employer Size Determinations: The U.S. Small Business Administration has prepared information to assist employers in determining the number of full-time or full-time equivalent employees.
The Kaiser Family Foundation has prepared the following flow chart to illustrate how these requirements work (available online here).