How does ACA affect your small business? IRS offers tips

The IRS has just published helpful guidance reminding small businesses that most employers with fewer than 50 full-time employees or full-time equivalent employees, on average during the prior year, are not subject to the Patient Protection and Affordable Care Act’s (ACA), employer shared responsibility provision, since they are not applicable large employers (ALEs) for the current calendar year. This means that, not only are such employers not subject to the ACA’s employer shared responsibility provisions, they are also not subject to the employer information reporting provisions for the current year.

All employers, regardless of size, that provide self-insured health coverage must file an annual information return reporting certain information for individuals that they do cover, however. The first returns are due to be filed in 2016 for coverage provided during 2015.

Tax credit available. The IRS reminds small employers that, even though they are not required to, they can purchase health insurance coverage for their employees through the Small Business Health Options Program—better known as the SHOP Marketplace. And, 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 generally, after 2013, if they purchase coverage through the SHOP.

The IRS states that 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.

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