Tag Archives: affordable care act

How Does the Affordable Care Act Impact Your Business?

The health care law contains tax provisions that affect employers. The number of employees an employer has during the current year determines whether it is an applicable large employer for the following year and which parts of the law apply to which employers.

  • Applicable large employers are generally those with 50 or more full-time employees, including full-time equivalent employees.
  • Employers with fewer than 50 full-time employees, including FTE employees, are not applicable large employers.

Fewer Than 50 Employees

Information Reporting

  • All employers, regardless of size, that provide self-insured health coverage must le information returns with the IRS about individuals they cover and furnish a statement to employees about the coverage provided. If health coverage is provided through an insurance policy, the issuer les the return and furnishes the statement.
  • The first information reporting returns are due to be led and furnished in 2016 for 2015.

Payments

  • Employers with fewer than 50 full-time employees, including FTEs, are not subject to the employer shared responsibility provisions.

SHOP Eligibility

  • Employers can purchase insurance through the Small Business Health Options Program Marketplace.

Credits

Employers may be eligible for the small business health care tax credit if they:

  1. cover at least 50% of employees’ premium costs,
  2. have fewer than 25 FTEs with average annual wages of less than $50,000, and
  3. purchase their coverage through the Small Business Health Options Program Marketplace.

50 or More Employees

Information Reporting

  • Applicable large employers must le information returns with the IRS about the coverage they offered and furnish a statement to employees about the health coverage offered. If applicable large employers provide self-insured coverage, the employer also includes information about covered individuals on the information return.
  • The first information reporting returns are due to be led and furnished in 2016 for 2015.

Payments

  • Applicable large employers are subject to the employer shared responsibility provisions. Various forms of transition relief are available for 2015, including for applicable large employers with fewer than 100 full-time employees, including FTEs.
  • In general, applicable large employers are subject to a payment if the employer does not offer affordable coverage that provides minimum value to its full-time employees and their dependents and at least one full-time employee gets a premium tax credit.

SHOP Eligibility

  • Employers with 100 or fewer employees, including FTEs, in 2016 can purchase insurance through the Small Business Health Options Program Marketplace.

Find out more about the tax provisions of the Affordable Care Act at IRS.gov/aca.

ACA

Affects of ACA on Small Businesses vs. Large Businesses

The ACA is a major healthcare reform and the most significant change to the healthcare system since Medicare and Medicaid. One area that’s been affected dramatically is the way that businesses offer health coverage to employees. The primary factor that determines how a company is affected is the size of its workforce. Let’s now take a look at the differences between small businesses vs. large businesses.

 

ACA for Small Business

Small businesses are by no means impacted in the same way that large businesses are. For employers with fewer than 50 employees, it’s their choice whether or not they want to offer coverage. On the other hand, businesses with more than 50 employees are obligated to provide coverage or they may be hit with an employer shared responsibility payment (ESRP). This occurs if one or more employees receive a premium tax credit from the health insurance marketplace.

Businesses with more than 50 workers will be fined $2,000 per employee excluding the first 30 employees when they don’t offer coverage to full-time employees. It’s also important to remember that the hours of several part-time employees can be combined to equal that of a full-time employee. Therefore, this should be taken into consideration when determining the number of full-time employees.

 

ACA Exemptions

A common misconception is that small businesses have to provide health coverage to workers or they will be penalized. This isn’t the case, and any company with fewer than 50 employees isn’t required to offer coverage and will not incur any penalties. However, there are some definite advantages of small business owners offering coverage to workers.

 

Benefits of ACA

Perhaps the biggest benefit of the ACA is the tax credits that employers can get. Prior to 2014, they could only get a tax credit of up to 35 percent of their employees’ contributions. Starting in 2014 and going forth, they can now get up to 50 percent as long as they purchase coverage through the SHOP marketplace. Unlike in the past where business owners were often forced to complete a lot of administrative tasks, the establishment of online healthcare exchanges has simplified things considerably. Consequently, they aren’t required to fill out piles of paperwork and can provide employees with quality health coverage with minimal hassle.

Due to the number of different health insurance plans available through the marketplace, employees are usually able to find the right coverage for the right price. There is a high level of customizability so all of their healthcare needs can be taken care of without being over-insured. Because healthcare providers cannot discriminate against individuals with existing medical conditions, the ACA makes it possible for nearly everyone to get coverage at a reasonable price.

The bottom line is that offering health coverage is simply an option for small businesses and a requirement for large businesses with more than 50 employees. Smaller operations don’t have to deal with penalties, while larger ones may have considerable penalties if they fail to provide coverage. However, with multiple benefits of the ACA, it would still behoove many small business owners to provide health insurance to their employees.

 

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