IRS Affordable Care Act Tax Provisions for Employers

IRS Affordable Care Act Tax Provisions 

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Determine Employer Size

The Affordable Care Act includes benefits and responsibilities for employers. What applies in your case will be determined according to the size and structure of your workforce.

Small Employer

If you have fewer than 50 full-time employees or equivalents (FTE), you may eligible for credits and other benefits as a small employer.

Large Employer

If you have more than 50 FTEs, you will be considered a large employer under the Act.

Provisions for Small and Large Employers

  • Employers having fewer than 25 FTEs may be eligible for a Small Business Health Care Tax Credit to support the cost of providing coverage.
  • In general, employers with fewer than 50 employees may be eligible to purchase coverage via the Small Business Health Options Program (SHOP).
  • Employers with 50 or more employees will be required to file an annual information return reporting whether and what kind of health insurance they offered employees. They will also be subject to the provisions of the Employee Shared Responsibility.
  • All employers, irrespective of size, who provide self-insured health coverage to employees, are required to file an annual return reporting certain information for each employee they cover.
  • The workforce size in case of certain affiliated employers with common ownership or part of a controlled group will be determined by aggregating the employees.

Floridian Quote serves clients in Miami, Orlando, Tampa, Jacksonville, Florida, and other areas.

Employer Shared Responsibility Provisions: Basics

What are the Provisions?

From 2015 onwards, employers with a certain minimum number of employees (usually 50 FTEs) will be subject to the Employer Shared Responsibility Provisions under Section 4980H of the Internal Revenue Code. As defined under the statute, an FTE is a person employed for an average of 30 hours or more per week. An applicable large employer is one who meets the 50 FTE criteria.

Under the Employer Shared Responsibility provisions, if the employer does not provide affordable health coverage to the FTEs (and their dependents), the employer can be subject to an Employer Shared Responsibility payment if at least one of the FTEs receives a premium tax credit for buying individual coverage on one of the new Affordable Insurance Exchanges.

Since when are Employer Shared Responsibility provisions effective?

These provisions are generally effective from January 1st, 2015 onwards. This means that no assessment for Employer Shared Responsibility payments will be done for 2014. Employers are required to apply information about the number of employees they employ and their hours of service during 2014 to determine whether they employ enough employees to be considered an applicable large employer in 2015.

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