Pros and Cons of Obama Care

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The Affordable Care Act withstood many trials on its way toward becoming reality, from epic congressional battles, to a pivotal Supreme Court ruling, to — finally — yesterday's Presidential election.

Saul Loeb | AFP | Getty Images Obama's reelection means his health-care reform act has dodged its last bullet, and the age of universal mandates, penalty taxes and tax credits will almost certainly go into effect, although probably not exactly as scheduled on Jan. 1, 2014.

What do you need to do to get your business ready?

(Read more: Warby Parker CEO: Startups Focused on Health-Care Costs, Immigration Reform)

Inc. put the question to health-care policy expert Henry J. Aaron, a senior fellow at Washington think tank Brookings Institution. Aaron offered three key ideas for entrepreneurs facing the enormous changes scheduled for health care during Obama's second term.

1. Weigh the Costs

The key decision you will face is whether to sponsor a health-care plan, if you don't already have one, or to drop a policy you may have and leave employees to buy insurance on the exchanges themselves. The pros and cons of either route will depend on the size of your payroll, both in people and dollars. Do you have 50 or fewer employees? Then you aren't subject to penalties for not providing an employee plan. On the flip side, helping employees pay for insurance affords tax advantages. If you have fewer than 25 full-timers on your payroll and their average pay is less than $50,000, the law affords you a tax credit of up to 35 percent for providing insurance today, rising to 50 percent in 2014.

(Read more: Disaster Loans Soar as Businesses Struggle After Sandy)

"There's a calculation to be done," said Aaron, if your employees are below the threshold (which tops out at 400 percent of the poverty line) for getting a federal subsidy to buy insurance on their own. In such a case, it might make sense to drop insurance and add the savings to your employee's cash...
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