Health & Wellness

What Obamacare means to you if you're a small business owner

ivillage / Today
Shopping Health Care: Small Business Owner

If you employ less than 50 people you're considered a small business owner.

Is the exchange for me? No. Small business owners who offer employees health insurance don't shop on the individual exchange. Instead, you shop at a separate marketplace called the Small Business Health Options Program (SHOP). To use SHOP, you must offer coverage to all full-time employees working 30 or more hours per week, and 70 percent of your employees must participate (e.g. if you have 20 employees, at least 14 have to opt in). If your business employs fewer than 25 people (total) who earn an average of $50,000 or less, you may also qualify for a Small Business Healthcare Tax Credit if you buy coverage through SHOP.

What else do I need to know? Because you're a small business, you're not required to offer health coverage to employees. If you only want to buy health insurance for yourself and your family, you can shop the regular exchange. Individual policies are based on income. Your income will determine if you qualify for a tax credit to help you offset the cost of coverage. You can use the credit as a deduction from your monthly insurance costs or as an annual deduction at tax time. Expect to pay between 2 percent (minimum) and 9.5 percent (maximum) of your income for insurance if your earnings fall into any of the below ranges:

  • $11,490 - $45,960 for a single person
  • $15,510 - $62,040 for a family of two
  • $19,530 - $78,120 for a family of three
  • $23,550 - $94,200 for a family of four

What if I don’t buy coverage? You’ll pay a tax penalty of either 1 percent of your income or $95 per adult and $47.50 per child for the year, whichever is higher. In 2016, the penalty increases to 2.5 percent of income or $695, whichever is higher. Plus, anyone without health insurance will have to pay the full cost of medical care should they need it. You won’t have to pay a penalty for not having insurance if you fall into one of these categories.

  • You qualify for Medicaid but your state didn't expand the program

  • Your state’s health exchange doesn't have a plan you can afford (costs less than 8 percent of earnings)

  • You spent less than three months without coverage

  • You’re a member of a recognized religious group with objections to insurance and government programs, including Social Security and Medicare

    For more on who is exempt visit