Although the Affordable Care Act (ACA) was passed in 2010, much of its regulations have been implemented gradually. The ACA was fully implemented in 2013, and small businesses are now learning how it affects them. Many of the law’s mandates do not apply to businesses with fewer than 50 employees, but the ACA still affects small businesses.

You aren’t required to provide healthcare

Businesses with fewer than 50 full time employees are not mandated to provide their employees with insurance. There are more options available to you as well, such as Employer Health Care Arrangements, defined by the Small Business Administration as, “Employer health care arrangements, also known as employer payment plans, generally include those arrangements where the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance, either through a qualified health plan in the Marketplace or outside the Marketplace.”

Your business is required to report different healthcare provisions

One way in which the ACA is affecting businesses is that employers are now required to report more healthcare expenses to the IRS. According to the IRS, “Every provider of minimum essential coverage will report coverage information by filing an information return with the IRS and furnishing a statement to individuals. The information is used by the IRS to administer — and individuals to show compliance with — the individual shared responsibility provision in section 5000A.” Failing to report information correctly may result in penalties, so it is increasingly important for business owners to stay in compliance with reporting rules.

Small businesses may be eligible for tax credits

Although your business is not required to provide health insurance for its employees if there are fewer than 50, you may be eligible for tax credits if you choose to do so. The Pennsylvania Small Business Development Centers states, “Small business employers that provide healthcare coverage are eligible (a ‘qualified employer’) if:

  • They have fewer than 25 full-time equivalent employees (FTEs) for the tax year
  • The average annual wages paid are less than $50,000 per FTE
  • The employer pays at least 50 percent of the premium cost under a ‘qualified arrangement.’

Check with your tax attorney or CPA to determine whether or not your company is eligible for this tax credit.

The ACA is still a work in progress, and with each year, its effects on small businesses will become more apparent. There are still many components in the Act that help protect small business owners against economic hardships associated with implanting the law’s requirements.


This article was written by Alaina Brandenburger for Small Business Pulse


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