California Small Businesses Get Extra Time to Comply with the Affordable Care Act

Some small businesses in California are getting an extra year to comply with the requirements of the Affordable Care Act, which is also colloquially known as “Obamacare.” Radio Station 89.3 KPCC is reporting that a bill signed by Governor Brown this week will give the smallest mom and pop businesses in the state an additional year before they are required to comply with the requirements of the Act.

Requirements Under Federal Law

Federal law requires that employer-offered health insurance plans must cover essential health benefits. There are ten specific essential health benefits listed in the act. These are listed on the federal government’s website, HealthCare.gov:

1. Plans must cover outpatient care–the care you receive without being admitted to the hospital;
2. Plans must cover trips to the emergency room;
3. Plans must cover treatment in the hospital for inpatient care;
4. Plans must cover care before and after your baby is born;
5. Plans must cover mental health and substance use disorder services, including behavioral health treatment, counseling, and psychotherapy;
6. Plans must cover prescription drugs;
7. Plans must cover services and devices to help you recover if you are injured or have a disability or chronic condition, including coverage for physical and occupational therapy, speech-language pathology, psychiatric rehabilitation, and other services;
8. Plans must cover lab tests;
9. Plans must cover preventive services including counseling, screenings, vaccines, chronic disease management, and other care; and
10. Plans must cover pediatric services including dental and vision for kids.

The federal law puts these requirements in place even for the smallest businesses with less than 50 employees. Those businesses are not financially penalized for not providing employee insurance, but if they provide insurance, federal law will require that the coverage include the 10 items listed above. The new state law, however, prevents these requirements from going into effect for those smallest businesses until the end of 2015, so long as the business purchased health insurance for its workers by December 31, 2013.

Earlier Version Had More Lenient Time Period

An early version of the law would have given these smallest businesses three years to comply instead of just one, but that version did not survive the legislative process. According to the Sacramento Business Journal, sponsor of the bill California Insurance Commissioner Dave Jones said that the passage and signing of the bill is a victory for small businesses. He said, “While many small employers will move to new health insurance options right away, SB 1446 provides additional choices to those who choose to use the transition period.”

Compliance with both federal and state laws can become confusing to a new business person, especially when new massive regulations like the ACA are just coming into effect. If you have questions about how these or other regulator laws apply to your new business, contact a licensed attorney in Sacramento. Attorneys can counsel you through the process of making sure that your business is in compliance with all of the relevant laws and regulations.