New health insurance requirements still baffle many business owners. They don’t know whether they need to purchase policies for their workers; what kind of policies they should buy; or what fines they could face by ignoring the legislation. Although it’s impossible to know exactly how the Affordable Care Act will affect businesses until it has been fully implemented, there are some facts and generalities that can help business owners prepare for the near future.

Does the Affordable Care Act Require Business to Offer Health Insurance?

Technically, Obamacare doesn’t require businesses to give their employees health insurance of any kind. Certain companies that fail to offer coverage, however, could face fines.

This largely depends on the size of the company and how many full-time employees it has. Any small business with fewer than 50 full-time employees does not have to pay these fines. Companies that have more than 50 full-time employees, however, will have to pay. The exact amount that they have to pay, however, can depend on numerous factors.

Will Obamacare Cause Businesses to Lose Money?

In some cases, companies will have to spend more money on employee benefits, at least if they want to avoid fines. Small businesses, however, could actually benefit financial from the Affordable Care Act.

One report shows that small businesses with fewer than 100 full-time employees will actually spend 1.4 percent less. Smaller businesses could benefit even more.

One reason is that businesses who employ 25 or fewer people can qualify for a tax credit when they offer health insurance. That credit could go a long way towards offsetting the extra expense.

Some researchers also believe that it will make sense for businesses to purchase health insurance policies for full-time employees because the state-run insurance marketplaces will lower costs. If insurance premiums fall, then more companies can include coverage as an employee benefit. Those who already offer the benefit could find that their overall expense falls.

Some Businesses Will Spend More Money Because of Obamacare

Some companies, however, will almost certainly spend more money on health benefits once the mandate is fully in effect. Companies with 101 to 1,000 employees might see a 9.5 increase in overall compensation costs because they will need to give health benefits to more employees and they will not qualify for tax breaks.

The cost for companies with more than employees is expected to jump by a little more than 4 percent. Some people criticize this result of the mandate because it could force small businesses to hire fewer people. Others believe that companies with 1,000 employees are large enough to absorb the costs without much damage.

Will Coverage Increase?

When Massachusetts enacted similar health insurance requirements under Mitt Romney’s leadership, coverage increased significantly. Some researchers show that coverage jumped from 70 to 77 percent. Massachusetts businesses affected by the law also saw their costs increase by about 9 percent. Still, the state’s economy grew faster than most. The increased spending didn’t seem to slow hiring or growth. Businesses afraid of Obamacare’s requirements, therefore, might not have much to worry about.

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