The Affordable Care Act: Its Effects On You

The Patient Protection and Affordable Care Act of 2010 – referred to by many as Obamacare – has already begun to effect businesses of every size. The act is intended to ensure that employees are provided with health care, or the means to pay for health care. Depending upon the size of your business, there are different factors to consider.

Small Businesses
Employer responsibilities will differ depending upon the number of employees. If you employ fewer than 25 full time employees, you could receive a small business health care tax credit if you provide them with health insurance.

Should you decide to pursue this option, you must first determine how many full time equivalent employees you currently pay. For this calculation, you can also include part time employees as a percentage of a full time employee.

In addition, you must cover at least half of the cost of health care coverage for some of your employees – and pay average annual wages below $50,000. To receive the tax credit when you file your business tax return use IRS Form 8941 (PDF).

Large Businesses
Businesses that fall into the category of “larger employers” have more than 50 full time employees. These businesses do not have to start providing health care to employees until January 1, 2015. However, when 2015 starts, you may be subject to penalties if you are not providing “affordable” health care to your employees.

If you do not provide adequate health insurance, you must pay an assessment fee if any of your employees receive tax credits to purchase their own insurance.

Affordable health care insurance is defined as being provided by the employer, who must pay 60% of the covered health care expenses. Employee premiums cannot exceed 9.5% of their family income for individual coverage offered by you.

Another important detail: if you fail to provide any coverage, or the coverage is determined not to be affordable, the amount of the penalty is $2,000 – however the first 30 workers are not included in the calculation.

Largest Employers
The next classification under The Affordable Care Act is “largest employer”, which is a company that employs more than 200 full time employees. The act requires that new employees must be automatically enrolled in the health care plan if they are eligible. An employee must opt out if he or she wishes not to participate in the health care plan.

KatzAbosch realizes that The Affordable Care Act places a great deal of responsibility on the employer, no matter what size or industry. To find out more about how we can help your company successfully deal with the demands of The Affordable Care Act, contact us today at 410-828-2727 (CPAS) or complete the form on our website.

prepared by James F. Eaton, III, CPA, MBA

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