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How Obamacare Defines a Small Business for Insurance Plans

Obamacare, otherwise known as the Affordable Care Act, created new rules for defining what exactly is a small business for purposes of insurance. It’s a little confusing because there is more than one definition in the act. Following is a breakdown of the differences that affect businesses of different sizes:

  • A business with fewer than 50 full-time equivalent employees are considered to be a small business for the purposes of the act. A full-time equivalent employee can consist of four employees working 10 hours a week each for a total of 40 hours. In essence, a business can have 100 employees, but if the sum total hours are less than 2,000 man-hours a week, the business is considered to be a small business.
  • Businesses with less than 25 full-time equivalent employees making yearly wages of less than $50,000, and providing health insurance, may be able to qualify for a health insurance tax credit of up to 35 percent, and up to 50 percent in 2014. In order to determine the average yearly wage, the sum total wages need to be added together, then divided by the amount of employees. 

Are you in the Los Angeles, California area and need an insurance policy for a specific need? Contact Save-On Health Insurance Services, Inc. today to speak to an agent!