The Constitutionally Upheld Affordable Care Act Will Help Sole-Proprietors, Small Businesses and Nonprofit Organizations Obtain Health Insurance.

Today the United States Supreme Court made history by upholding the constitutionality of the Affordable Care Act’s “individual mandate” provision. At the Sustainable Law Group, we understand how personal this decision is for many sole proprietors, small business owners and nonprofit leaders. In fact, we have personally experienced the importance of having health insurance, and how difficult and expensive it can be for self-employed entrepreneurs to obtain coverage. The individual mandate will help us keep our health insurance, and it will allow our firm to grow due to the opportunity to shop for health insurance through the “Affordable Health Care Exchange.” We can also take advantage of tax credits available to small businesses.

Because this issue is critical to us and our small business and nonprofit clients, we felt it was important to write this piece explaining what the Affordable Care Act and the Supreme Court’s decision will mean for all of us.

The Supreme Court’s opinion in National Federation of Independent Business et al. v. Sebelius, Secretary Of Health And Human Services, et al. simply means that most individuals who do not currently have health insurance will now need to purchase health insurance by 2014 or pay a tax penalty. The Affordable Care Act also creates an “Affordable Health Care Exchange” to help individuals and small businesses find competitively priced insurance. In addition, the Act exempts those who do not earn enough money to pay for insurance from the tax and possibly qualifies individuals for assistance in obtaining health insurance.

The Supreme Court’s opinion did not affect the other provisions of the Act that apply to small businesses and nonprofit organizations. The Affordable Care Act does not require small businesses and nonprofits to provide health insurance for its employees. However, large employers with 50 or more full-time employees have a shared responsibility to offer an affordable group health care plan to all of their full-time employees and their dependents. (The Act defines a full-time employee as an individual who regularly works and average of 30 hours per week) If large employers do not offer all of their full-time employees an affordable group health care plan, the employers must pay a tax to the IRS. According to the Department of Health and Human Services, less than 2% of large employers will have to pay the tax because most employers with 50 or more full-time employees already offer group health insurance.

The Affordable Care Act also provides an incentive to help small businesses and tax-exempt nonprofit organizations with purchasing health care for their employees. Starting in 2010, small businesses and tax-exempt nonprofits that employ fewer than 25 full-time employees with an average annual wage of $50,000 or less can receive a tax credit (up to 35% for small businesses and 25% for nonprofits) to offset the cost of purchasing health care coverage. Starting in 2014, this credit will go up to 50% for small businesses and 35% for nonprofit organizations.

The Affordable Care Act, if implemented properly, will level the playing field for many small business owners, entrepreneurs and nonprofit organizations that want to provide health insurance benefits for families and employees. When we can all provide affordable health care for ourselves, our families and employees, we will be that much closer to obtaining a healthy and sustainable future.

-Becki Ueno

Sustainable Lawyer