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"Start with good people, lay out the rules, communicate with your employees, motivate them, and reward them. If you do all these things effectively, you can't miss."
~ Lee Iacocca, American businessman known for reviving
the Chrysler Corporation
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Dear Reader:
On January 1, 2014, the shared responsibility for health coverage by "large" employers (more than 50 full-time equivalent employees) takes effect.
This health coverage mandate presents challenges for small businesses as well, including determining whether they are safe from the mandate; finding ways to keep from becoming a large employer; and, with or without the mandate, providing affordable coverage for staff in the face of rising premiums.
These are challenges discussed in the following articles in this issue.
~ Barbara
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Are You Subject to the Employer Mandate in 2014?
Starting in 2014, employers (other than exempt employers) must provide affordable health coverage to their staff or pay a penalty. This is called the employer mandate (described as a "play-or-pay" model) and is a key feature of the Affordable Care Act.
 While the threshold for being subject to the mandate -- having more than 50 full-time employees -- sounds simple, determining whether it applies is rather complex. Here are some of the details you need to know in order to determine whether you'll be subject to the employer mandate in 2014.
Adding up full-time employees
It's not a simple body count to know whether you have more than 50 full-time employees. This is because part-timers can add up to full-time equivalent employees (FTEs). A combination of employees working 120 hours per month (around 30 hours per week) counts as one employee. This has led to the term "29ers," who are employees who do not work 30 hours and, so, are not treated as full-time employees on their own. However, their hours do matter, as you'll see from the calculation below. | |
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Large companies (those with more than 50 employees) become subject to a new health care mandate starting on January 1, 2014. These companies must provide certain levels of health coverage or pay a penalty. Some businesses that have crossed the 50-employee threshold are planning to pay the penalty because it is much, much lower than the cost of mandated health coverage. The Wall Street Journal reported that one company with 102 employees figured the penalty to be $140,000 compared with $500,000 for coverage. It's unfortunate that smaller companies are looking for ways to avoid the mandate, but the reality is that many won't be able to stay in business if they are forced to provide health coverage. For companies near the cusp that want to avoid the mandate, there are certain strategies to use. |
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Obtaining Affordable Health Coverage for
Your Staff
| All small employers want to ensure that their employees are healthy and financially protected in case of medical problems. Unfortunately, the rising cost of health coverage has made it impossible for some small companies to continue to pay for all or even some of their employee's health coverage, whether or not they are subject to the employer mandate that starts on January 1, 2014.
What can you do now to maximize your health care assistance for your staff?
Small employer health exchanges
The government's solution to rising premiums was to create a government-run marketplace where competition would drive costs by allowing employees in small companies to choose their coverage. The marketplace is called the Small Business Health Options Program (SHOPs).
SHOPs were supposed to be open by October 1 of this year to enable employees to select their coverage for 2014; unfortunately, the government has announced a postponement for SHOPs, giving employees only a single plan until 2015.
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Our Readers Ask
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Q: What happened to equity crowdfunding? I thought it was going to be a money-raising option this year?
A: Equity crowdfunding was created by the JOBS Act in April 2012. The SEC was directed by the law to issue guidelines for businesses to raise money (up to set limits) by offering equity without the need for complex registration by early 2013; this didn't happen. Most experts in this area expect SEC guidance much later this year. In the meantime, small businesses can still use non-equity crowdfunding through such sites as Kickstarter, Fundable, and Crowdfunding.
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Book Review
Legal Guide for Starting and Running a Small Business,
13th edition
Fred S. Steingold ~ NOLO ~ Paperback: $39.99
 Don't have a legal department? You do if you keep this book handy and refer to it whenever you have an issue about laws affecting your business. Fred Steingold, an attorney in Ann Arbor, Michigan, provides clear legal information you can't be without. The latest edition has been updated to reflect the latest laws impacting your business. Topics include selecting the right entity for your business, licensing and permits, negotiating leases, and legal issues in raising money. EXTRA: I couldn't pass this one up -- The SlimPreneur: How to Lose Weight While You Make Money Janet K. Fish ~ Morgan James Publishing I haven't read it, but was intrigued by the title. The book focuses on the importance of your health while starting and running a business. Anyone who reads it, please let me know what you think.
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It's a Fact!
Audit Statistics Rather Modest
The number of audits for businesses during the government's fiscal year 2012 were the same or lower than in the prior year:
- Sole proprietorships with gross receipts between $100K and $200K: 3.6% (4.3% in FY11)
- S corporations: 0.5% (0.4% in FY11)
- Partnerships: 0.5% (0.4% in FY11)
- C corporations with assets under $250,000: 0.9% (0.9% in FY11)
Source: IRS 2012 Data Book
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Build Your Business and Business Leader Radio
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Mobile Site Launch!
I'm very pleased to announce that you can now get your Idea of the Day® and all the latest news and information from Big Ideas for Small Business® on your mobile devices. You don't have to miss out -- get your "Big Ideas On the Go!"
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