The Affordable Care Act (ACA), signed into law by President Obama in March 2010, changes the way Americans shop for health insurance. The centerpiece of the ACA, the establishment of state health insurance exchanges, takes effect Jauary 1, 2014. Each state must offer individuals and small businesses access to the health insurance marketplace, and many individuals and small businesses will be eligible for subsidies and tax credits to offset costs.

For Massachusetts small businesses, the change is not as profound as it is for the rest of the country. The Massachusetts Health Reform law of 2006 created the Health Connector insurance exchange where small businesses can shop for employee health plans. The Massachusetts requirement that businesses either offer health insurance to their employees or pay a Fair Share Contribution is similar to mandates in the ACA.

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Massachusetts legislators have made some changes to the state’s health reform law to ensure Massachusetts is in full compliance with provisions in the ACA. Additionally, the full implementation of the ACA comes with some new tax credits and grants for small businesses. The following are a few changes that affect small businesses in Massachusetts.

Small Business Health Options Program (SHOP)

The ACA requires states offer a Small Business Health Options Program (SHOP) in their exchanges where businesses with fewer than 50 employees may purchase health plans as part of their employees’ benefit packages. Massachusetts businesses already have access to a similar program, the Business Express, through the Health Connector. By 2016, states must expand this access to include businesses with fewer than 100 employees.

Small business tax credits

Businesses that purchase health insurance for their employees through the SHOP program may be eligible for tax credits. To qualify for this credit, a business must have fewer than 25 full-time employees with annual average salaries of up to $50,000 and the employer must contribute at least 50 percent ot the employees’ premiums. Beginning January 2014, this credit will be 50 percent of the employer’s contribution to employee premiums.

Tax credits and grants for workplace wellness programs

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Massachusetts businesses that employ 200 or fewer employees are eligible for a tax credit of 25 percent of costs, up to a maximum credit of $10,000, associated with offering employees a certified wellness program. Additional help with funding wellness programs is provided by the ACA under section 10408. This provision of the law appropriates $200 million to be used for a grant program to assist small business with the costs of establishing workplace wellness programs. To be eligible, businesses must have fewer than 100 employees who work 25 or more hours per week. The Department of Health and Human Services is expected to release details of this program in 2014.

The ACA gives employers increased flexibility in the incentives they offer employees to encourage greater participation in cost-saving wellness programs. Effective January 1, 2014, employers may reward employees up to 30 percent of the cost of health insurance premiums for wellness program participation. Rewards for participation in tobacco cessation programs may be as high as 50 percent of premiums.

Employer notification requirement

All businesses, regardless of size, are required to notify their employees, both full-time and part-time, of the health care options available in the health insurance marketplace. By October 1, 2013, employers must provide notice to current employees; new employees must receive notification when hired. The Department of Labor provides a sample notice that employers may use to comply with this rule.

Fair share contribution repealed

The Massachusetts Health Reform law required that businesses with 11 or more employees contribute a minimum amount to their employees’ health insurance premiums or pay a Fair Share Contribution of up to $295 per employee. In July 2013, Governor Deval Patrick signed legislation repealing this provision. The federal employer mandate, which assess a penalty on business that fail to provide health insurance benefits to employees, does not affect businesses with fewer than 50 employees.

Gillian Burdett is a freelance writer covering all things home and living. Her work can be found on

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