Now that the Supreme Court has upheld the majority of the Affordable Care Act, nail salon owners need to know how health reform may impact their business. Are they required to provide health insurance to employees? Will they face penalties if they don’t?
Nail salon owners have so many things to worry about as it is — managing staff, keeping pace with new products and trends, marketing to attract new customers, and making a profit in today’s challenging economy. Are things about to get even more hectic now that the Supreme Court has upheld the majority of the Affordable Care Act? The answer is … not necessarily.
Knowledge is power. Here are five things salon owners need to know about health care reform:
1. Employer-sponsored plans must be “affordable” and provide “minimum value.”
Well, that sounds kind of vague, doesn’t it? In the eyes of the law, “affordability” means that out-of-pocket premiums paid by workers cannot exceed 9.5% of their family income.
“Minimum value” translates to this: The health insurance plan has to pay for a minimum of 60% of medical care covered. This all works to prevent employees from being overwhelmed by co-pays and deductibles. The U.S. Department of Treasury has not yet released a detailed proposal clarifying whether the law will set requirements for what a plan must cover.
2. Smaller nail salons do not have to offer health insurance.
Under the law, small businesses (under 50 employees) are under no obligation to provide health insurance to employees.
3. Large nail salons that do not offer health insurance coverage will likely face a penalty tax.
Contrary to popular belief, the law does not automatically fine large businesses (over 50 employees) for not providing health insurance. A large business is only penalized if any one of its employees receives a tax credit for buying her own private health insurance plan. If your large salon does not offer health insurance, chances are good that at least one of your full-time workers will seek out her own coverage through one of the new health insurance exchanges.
The employer penalty is equal to $2,000 multiplied by the number of workers in the business in excess of 30 workers (with the penalty amount increasing over time).
4. Small nail salons are eligible for tax credits.
Even though small businesses aren’t obligated to offer health insurance, some still may want to. If your salon employs up to 25 people, pays average annual wages below $50,000, and provides health insurance, you may qualify for a small business tax credit of up to 35% to offset your health insurance costs. As of 2014, the small business health insurance tax credit increases to up to 50% for qualifying businesses.
5. Part-time workers don’t apply.
The new law considers only employees who work over 30 hours a week to be full-time. Your salon is not required to extend health insurance coverage to part-time employees.
Erinn Springer is a consumer health insurance expert with GoHealth (www.gohealthinsurance.com).
GoHealth is an online marketplace where consumers can compare health insurance plans and companies.