Small Businesses and the Affordable Care Act

February 21, 2013

For Immediate Release

Contact: Gigi Thompson Jarvis

202.822.6232, x119                                           

gjarvis@naea.org

download a Word version of this press release

Small Businesses and the Affordable Care Act

Washington, DC, February 21, 2013 -- The Patient Protection and Affordable Care Act is not going to have an immense impact on individual tax returns this year, but what about small businesses? Like so many things, it depends.

To be clear, the Affordable Care Act does not require employers to provide coverage to their employees. However, the federal government, states, insurers, employers and individuals are now required to share the responsibility of improving the availability, quality and affordability of health care in the US. Small business owners will find that the primary deciding factor in the impact of the Affordable Care Act on their businesses is how many people they employ.

Business owners with fewer than 25 full-time equivalent employees who choose to provide insurance qualify for tax credits though the Act – up to 35 percent for employers who pay average annual wages below $50,000 and contribute 50 percent or more toward employee health insurance premiums. Non-profits meeting these criteria qualify for up to 25 percent in tax credits.

Businesses with 50 or fewer full-time equivalent employees will be able to purchase coverage through competitive marketplaces where employers can find health coverage from a selection of providers. Individual marketplaces will be available for the self-employed. These marketplaces will open on January 1, 2014 – open enrollment begins on October 1, 2013.

Beginning in 2014, businesses with 50 or more full-time equivalent employees that do not offer affordable health insurance with a minimum level of coverage to substantially all of their full-time employees and their dependents may be subject to an employer shared responsibility payment if at least one of their full-time employees receives a premium tax credit to purchase coverage in an insurance marketplace.

If you find this all a bit confusing, you may want to contact an enrolled agent – they’re America’s tax experts and many of them specialize in small business taxes. Search the “Find an EA” directory on www.naea.org and select “Small Business” from the “Search by Profession” list. You can also enter a zip code to narrow your search by location.

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About Enrolled Agents

Enrolled agents are the only federally-licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. They are required to complete many hours of continuing education each year to ensure they are up-to-date on the constantly changing tax code and must abide by a code of ethics. The National Association of Enrolled Agents (NAEA) is the professional society that supports its members with resources, education and networking and by representing their interests to government, business and the general public.