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Affordable Care Act: What Employers Need to Know

Affordable Care Act: What Employers Need to Know

The first thing you have to figure out is whether you're a big or small employer because the rules are different. Generally, if you have fewer than 50 employees, you're a small employer; 50 or more makes you a large employer. However, the IRS says that if you have fewer than 50 employees, but are a member of an ownership group with 50 or more full-time equivalent employees, you're considered a large employer.

Provisions for Small Employers

If you fall into this category, you can purchase insurance through the Small Business Health Options Program (SHOP). You do have some reporting requirements, but they're pretty straightforward: you must withhold and report an additional 0.9 percent for any employees who make more than $200,000. Also, you might have to report the value of the health insurance coverage you provided to each employee on the annual W-2 forms.

Do you provide self-insured health coverage to your employees? This is certainly permissible, but comes with its own set of rules: You must file an annual return reporting certain information for each employee you cover. This rule was optional for 2014 but is now mandatory.

You do get some benefits as a small employer. The IRS notes that you may be eligible for the Small Business Health Care Tax Credit if you cover at least 50 percent of your full-time employees' premium costs and you have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.

Large Employer Requirements

In addition to the requirements for small companies, you also must file an annual return reporting what health insurance, if any, you offered your employees. And you may have to make a payment if you do not offer adequate, affordable coverage to your full-time employees, and one or more of those employees get a Premium Tax Credit. The employer shared responsibility provisions can get quite complex, and the IRS describes them in full detail.

More information on ACA requirements and provisions is available on the IRS website. Note also that regulations and provisions can change with little notice, so be sure to contact us for the latest information.

CopyRights 2021

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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