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Employers: Here’s a Mid-Year Affordable Care Act Refresher

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IRS Health Care Tax Tip 2016-60, July 13, 2016

As an employer, the size and structure of your workforce helps determine which parts of the health care law apply to your business. Work forces typically fluctuate, so it’s important to annually determine the size of your workforce.

The number of employees you have during the current year determines whether your business is an applicable large employer for the following year. Applicable large employers are generally those with 50 or more full-time employees, including full-time equivalents. Employers with fewer than 50 full-time employees, including full-time equivalents, are not applicable large employers.

Fewer than 50 Employees

50 or More Employees 

Applicable large Employers

Information Reporting

• All employers, regardless of size, that provide self-insured health coverage must file information returns with the IRS about individuals they cover and furnish a statement to employees about the coverage provided. If health coverage is provided through an insurance policy, the issuer files the return and furnishes the statement.

 

Payments

• Employers with fewer than 50 full-time employees, including FTEs, are not subject to the employer shared responsibility provisions.

 

SHOP Eligibility

• Employers can purchase insurance through the Small Business Health Options Program Marketplace.

 

Credits

Employers may be eligible for the small business health care tax credit if they do all of the following:

1. cover at least 50 percent of employees’ premium costs,

2. have fewer than 25 FTEs with average annual wages of less than $52,000 in tax years 2015 and 2016

3. purchase their coverage through the Small Business Health Options Program Marketplace

Information Reporting

• Applicable large employers must file information returns with the IRS about the coverage they offered and furnish a statement to employees about the health coverage offered. If applicable large employers provide self-insured coverage, the employer also includes information about covered individuals on the information return.

 

Payments

• Applicable large employers are subject to the employer shared responsibility provisions. Transition relief is available for certain employers for 2015 and 2016. 

• In general, applicable large employers are subject to a payment if the employer does not offer affordable coverage that provides minimum value to its full-time employees and their dependents and at least one full-time employee gets a premium tax credit.

 

SHOP Eligibility

• Employers with 50 or fewer employees, including FTEs, in 2016 can purchase insurance through the Small Business Health Options Program Marketplace. Starting in 2016, some states may make the SHOP Marketplace available to businesses with up to 100 employees. See the Small Business Health Options Program Marketplace for more information.

The Employer Shared Responsibility Provision Estimator can help you understand how the provision works and how it may apply. If you are an employer, you can use the estimator to determine the number of your full-time employees and whether you might be an applicable large employer,

For more information on these and other ACA tax provisions for employers, visit IRS.gov/aca.

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Page Last Reviewed or Updated: 13-Jul-2016