Health Care Reform and Your Small Business

What has the Affordable Care Act meant to your business so far?

When it was first passed, many small business owners were concerned about new complexities and potential added costs and disruptions in the way they run their operations or manage their staff. Now that important provisions of the law have been in force for a while, the California Society of CPAs ( offers a review of some of the highlights and some timely advice.

Don’t Overlook the Tax Credit

Despite concerns, 70 percent of businesses with fewer than 50 employees actually expected not to make any changes due to the new law, according to a Transamerica Center for Health Studies survey. Businesses of this size don’t have to provide health benefits to full- or part-time employees.

If you do offer insurance, you should know about the small business tax credit available to some businesses, and how to claim it on your tax return if you’re eligible. How does it work? Companies with fewer than 25 employees whose average wage is under $50,000 and that pay at least 50 percent of the premiums for employee-only coverage may qualify.

In 2014, you may be able to receive a tax credit for up to 50 percent of the premiums you pay on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace. The credit is available to eligible employers for two consecutive taxable years. That can mean a significant reduction in your health care costs, so be sure you’re making the most of it.

Contact your CPA for more details and information on whether you qualify.

Follow Developments on the Employer Mandate

Businesses with 50 or more full-time employees and full-time equivalents are subject to the law’s employer mandate, which will require them to provide health insurance to their workers or face a penalty.

If you don’t offer affordable, minimum value health coverage to your full-time employees and the dependents of those employees, and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a Marketplace, you will generally have to pay a fine equal to the number of full-time employees you employed for the year (minus up to 30) multiplied by $2,000.

So, if you have 40 full-time workers, you will have to pay the fine for 10 of them, which would add up to $20,000. There are also fines if your insurance is considered of less-than-minimal value or unaffordable.

Those employers with up to 99 full-time and full-time equivalent employees generally have until the 2016 plan year to provide insurance for 95 percent of their employees and their dependents up to age 26, as long as they meet certain conditions.

Those employers with 100 or more full-time and full-time equivalent employees must generally offer affordable, minimum value health coverage to 70 percent of full-time employees and the dependents of those employees for the 2015 plan year and 95 percent of full-time employees and the dependents of those employees for the 2016 plan year, in order to avoid a penalty.

There have been postponements in implementation already, however, so it’s a good idea to monitor developments on the mandate. Your CPA can provide the details you need to make decisions for your business.

Stake Out Your Start Up

Many people imagine launching their own company or escaping a job they no longer enjoy. They often stay put, however, for one important reason: the health insurance that their employer provides. Individual or family insurance can be prohibitively expensive, but the law’s goal was to make affordable coverage more easily available.

As a result, it may now be easier to turn your dream of a new career or business into a reality. If you’re not sure about your situation, or if you need any advice on starting a business or trying a new career, your CPA can offer the answers to your key questions.

Get Great Advice

Any business owner who is tangling with the intricacies of the new law will benefit from expert advice on what it means to them. Your local CPA can help. He or she can provide the insights and information you need to maintain compliance and ensure you’re keeping your business on the road to success.

Copyright 2014 American Institute of Certified Public Accountants.

The Money Management columns are a joint effort of the AICPA and the California Society of CPAs as part of the profession’s nationwide 360 Degrees of Financial Literacy program.

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