The Affordable Care Act – How it STILL Affects Small Businesses

With the recent defeat of healthcare reform in the US Senate, it is important to remember that businesses are still bound by the rules and regulations of the Affordable Care Act. We will be reviewing the basics of how the ACA affects small businesses, large corporations, and individuals. First up – small businesses.


Less than 50 employees? Here’s how the Affordable Care Act affects you.

Most businesses in the U.S. have fewer than 50 full-time employees or full-time equivalent employees. If you are one of them, you are not subject to the Affordable Care Act’s employer shared responsibility provision.

If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year.  Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year.

Employers with 50 or fewer employees have the option to purchase health insurance coverage for its employees through the Small Business Health Options Program – better known as the SHOP Marketplace.

Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates throughout the year. To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year, and divides that total number by 12.

          > Need help determining if you are a Small or Large Employer? <

Employers that have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 may be eligible for the small business health care tax credit if they cover at least 50 percent of their full-time employees’ premium costs and they purchase coverage through the SHOP Marketplace.

All employers, regardless of size, that provide self-insured health coverage must file an annual information return reporting certain information for individuals they cover.

Click here to contact your tax expert at Carpenter, Evert and Associates for additional help, or call today at (952) 831-0085.

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