Affordable Care Act Tax Provisions for Employers

Tax Provisions for Employers

IRS Health Care Tax Tip 2014-23, Dec. 23, 2014

The Affordable Care Act, or health care law, contains benefits and responsibilities for employers. The size and structure of your workforce – small, large, or part of a group – helps determine what applies to you. If you have no employees, the following information does not apply to you. However, other tax provisions, such as the insurance provider fee, or the branded prescription drug fee, may affect your organization. For a complete list of ACA tax provisions, visit the Affordable Care Act Tax Provisions page.

 

How do I know if I am a small or large employer? Why does it matter?

 

An employer’s size is determined by the number of its employees. Employer benefits, opportunities and requirements are dependent upon the employer’s size and the applicable rules. Generally, an employer with 50 or more full-time employees or equivalents will be considered an applicable large employer.

Employers with:

• Fewer than 25 full-time equivalent employees may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing coverage.

 

• Generally 50 or fewer employees may be eligible to buy coverage through the Small Business Health Options Program (SHOP). Learn more at HealthCare.gov.

 

• 50 or more full-time equivalent employees will need to file an annual information return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions.

 

• Regardless of size, all employers that provide self-insured health coverage to their employees must file an annual return reporting certain information for each employee they cover.

Certain affiliated employers with common ownership or part of a controlled group must aggregate their employees to determine their workforce size. Proposed regulations (pdf) and FAQs also provide more information about determining the size of your workforce.

 

Applicable large employers can find a complete list of resources and the latest news at the Applicable Large Employer Information Center.

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