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An Encinitas “solopreneuer” wonders whether she’ll have to cover future employees’ health care premiums if she decides to take on more workers.
Love it or hate it, Obamacare is moving forward as law, and that means you need to get in the know about health reform now. We’re here to help. Second Opinion is a weekly Q-and-A series that answers questions from San Diegans on the Affordable Care Act. Ask yours here.
Jean Scally runs the marketing firm Jeanius Marketing from her Encinitas condo. She meets with clients throughout the country via a webcam in her home office. The space is peppered with personal keepsakes – signs she’s a Bostonian, a rock climber, a surfer and also a “solopreneuer.”
That’s what she calls someone who owns and operates her business solo. Scally does it all, with help from the occasional independent contractor.
But she just scored a contract with the Las Vegas Convention and Visitors Authority and is looking to grow from a staff of one to a staff of two or three. She said she’d like to serve the local economy by hiring single moms and veterans, but she’s worried she can’t afford to pay their salaries and health insurance.
Video by John Rosman, KPBS
Here’s her question:
“How does [the Affordable Care Act] impact small businesses and, specifically, businesses that might use a lot of virtual employees or part-time employees?”
The Affordable Care Act mandates that businesses with 50 or more employees must offer their workers health plans by 2015, so Scally is in the clear. Her employees would be responsible for finding and paying for health insurance themselves.
But the law does try to incentivize buy-in from small businesses with tax breaks for those with 25 or fewer employees. If Scally chooses to insure her new hires, she’d be eligible for a return of up to 50 percent of what she pays toward their premiums.
Here’s how it would work:
What will it cost her? We’re not sure yet. Covered California is scheduled to release rates for its small business plans next month. But we can take a look at the math using last year’s average premium for employer-sponsored plans.
Tax credits will vary.
The 50 percent credit used above applies to businesses of 10 or fewer whose employees make $25,000 or less a year. Generally, as business size and salary go up, credits go down. Nonprofit and tax-exempt business should also expect to see lower credits. And the tax breaks are only available for two consecutive years.
Scally can grow her business up to 49 employees without having to worry about covering their health costs. If she wants to offer them benefits, she can call a broker or work with Covered California to find coverage starting in October.
What happens if Scally hires 50 workers? Check back next week for how the Affordable Care Act impacts businesses of 50 to 100.
Check out last week’s Second Opinion: Does Obamacare cover Acupuncture and Chiropractors?