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California Small Businesses Adjust to Affordable Care Act Compliance

Small businesses are a huge driver of California's economy and their ability to adjust to new ACA regulations is vital to the underlying financial health of the state.

California Small Businesses Adjust to Affordable Care Act Compliance
Monterey, CA, February 24, 2014 --( Fears that small businesses in California would have difficulty integrating Affordable Care Act (ACA) legislation have been all but squashed. This comes thanks to the ADP Regional Employment report showing the state’s addition of 9,330 private sector jobs in January. The number represents an increase of almost 250 percent from the state's numbers in April 2013, the first month ADP began issuing regional employment reports.

California small businesses, those companies with fewer than 500 workers, employed 50.4 percent of California’s private sector workforce in 2010. They are an essential and driving force in California, not only from a product development and service provider standpoint, but also in terms of employment opportunities and household income.

“The introduction of ACA legislation has been a real learning experience for California businesses, but they’re adjusting,” says Heather Fichter, the Operating Manager at Pinpay Payroll Solutions. “The temporary pushback of certain ACA requirements isn’t going to last forever, and companies that have been going it alone need to consider partnering with a service provider that is familiar with all the regulations and nuances of the legislation so they can reduce exposure to unexpected penalties.”

ACA requirements for California businesses are similar to those of the other states. For businesses with fewer than 50 full-time equivalent employees, the ACA requires:

-Caps on flexible spending contribution limits
-Increased Medicare withholding for some workers
-Group health enrollment periods reduced to 90 days or less

Businesses with 50 or more employees must implement additional compliance measures, including:

-Reporting aggregated employer health costs on W-2s
-Paying penalties for not offering health insurance
-Paying penalties when employees can find better, more affordable coverage through an exchange
-Offering insurance that meets ACA standards

If a California business with fewer than 100 employees wants to find coverage, it is permitted to go through the state’s health insurance exchange. The plans in the exchange vary widely in premiums, out-of-pocket costs, and benefits, but they all comply with the ACA’s coverage standards. California’s Small Business Health Options Program (SHOPP) is a marketplace designed for employers with 1-50 full time equivalent employees.

Many California business owners assume that a full-time employee is a worker who works an average of 40-hours a week. This could get business owners in trouble, however, because the ACA actually considers an average of 30-hours per week to be full time.

“We suggest California business owners look at the full 12-month look back period and establish how many employees would be considered full time under the ACA’s rules,” Ms. Fichter said. Employers can use a look-back period as short as three months, but those in the education industry must be careful not to treat teachers—who take summers off—as seasonal employees or to count their break periods in the evaluation as a means to reduce their overall average. Employers should instead exclude the break or credit the same average to the break as the teachers have during non-break work periods.

Businesses able to offer benefits to employees have always been better able to compete for the talent that can help propel their business forward. Pinpay Payroll Express’s ACA compliance division was designed to help business owners in California and other states offer better benefits packages while avoiding penalties and fines due to ACA non compliance.

About Pinpay Payroll Express

Pinpay Payroll Express provides small businesses with a fast, simple solution to all of their payroll processing needs. Their focus is on solving the payroll concerns of businesses in 45 states while also providing unique, customizable options for full tax compliance, payroll distribution, employee data, hours tracking, benefits enrollment, education and professional progress tracking, and more. This affordable service has no hidden fees and is accessible to budget-conscious business owners.
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Pinpay Payroll Express
John McEwan

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