In 2014 the Obamacare will be in effect and many small business owner and midsize owner are very confused by all the different penalties by not offering health insurance to their employees in Brentwood and the rest of California.

Small Companies are companies, which have less than 50 employees ,each employee is working more than 30 hours – Small Companies do not have to offer health insurance to their employees and will not pay a penalty.

(Be careful companies which have several locations, for example restaurants and carwashes might be considered as one unit – and therefore have more than 50 employees) If a part-time worker is working more than 30 hours he is considered a full-time worker).

Companies with over 50  full-time employees( employees who work more than 30 hours a week) do have to offer “minimal essential” and “affordable health insurance “to their employees or otherwise pay a penalty .

If an employer is not offering “minimum essential health insurance coverage” , and one employee is getting health insurance through the state exchange than the employer will  pay an annual per employee penalty of $ 2000, of $ 167 per month .

The calculation of penalty is as follow, the employer receive a credit of 30 full-time employees . So the company who has 50 employees has to pay a penalty  for 20 employees . The annual penalty would be $ 40,000 ( 20 x 2000)  or monthly  $ 3333.- ( 20×2000/12)  . Over the total employees calculated would be $ 67 per employee per month. ( 20×2000/(50.12)  – This penalty is far less than what you pay for health insurance per employee in the current market.

An employer’s coverage is considered unaffordable for any full-time employees who, in a given month, enroll in a health plan offered through a State Exchange and are eligible to receive federal premium subsidies . An employee is only eligible for premium subsidies through the state exchange if their required contribution for their employer’s plan is greater than 9.5 % .

If one or more full-time employees receive federal subsidies due to purchase of health insurance through an exchange in a given month, the employer must pay a monthly penalty based on the number of  full-time employees who receive federal subsidies . The annual per employee penalty for not offering affordable health coverage is $ 3000 . To get the monthly penalty is $ 250.- . For the first 30 employees you do not have to pay a penalty. So if you have a company with 50 employees and 3 employees buy health insurance on the state exchange and receive a subsidy , than you have to pay monthly for these employee together $ 750 .

These different calculations of the penalty, plus having a credit of $ 30 employees, is confusing and the best thing is to calculate with your accountant and insurance broker  if it is making sense to offer health insurance, which is tax deductible  or pay the penalty, which is not tax deductible.