Health Reform for Small Businesses

Under the Affordable Care Act (also known as "Obamacare"), businesses with fewer than 100 full-time-equivalent employees aren't required to provide health insurance to their employees and won't face tax penalties for not doing so.

Small business employers may receive tax credits when they provide coverage, as follows:

  • Employers with 25 or fewer employees with average annual wages of less than $50,000, may be eligible for a special tax credit of up to 35% of the amount the employer contributes (at least 50%) toward employee insurance premiums.
  • In 2014, that tax credit increases to 50% for employers who pay at least 50% of their employees' monthly health insurance premiums.

Whether you offer health insurance to employees or not, it is absolutely critical that you make your employees aware of their obligation to seek health coverage under the Affordable Care Act, and you have to let your employees know that they have access to guaranteed coverage in the individual market, and that they may be eligible for government subsidies if the coverage you provide them is not deemed to be affordable under the law.

Beginning in 2015, businesses with the equivalent of 100 or more full-time employees must provide "affordable" health insurance or pay a tax penalty. You can apply for health insurance by using the Health Insurance for Small Business page.

Your company will probably be eligible for a small business plan if it meets the following criteria:

  • Your company consists of at least two full-time owners, officers, partners, and/or employees, as verified by officially filed state quarterly wage and tax statements or annual federal tax return documents.
  • Your company is a legitimate business entity (i.e., your company was formed for a purpose other than to obtain insurance), as verified by one of the following documents:
  1. A business license or fictitious name filing (for proprietorships and partnerships)
  2. Articles of incorporation (for corporations)
  3. Articles of organization (for limited liability companies)
  • Your company meets the minimum employer contribution percentage set by the insurance company.

Please note that eligibility criteria may vary among insurance companies and by state. If you have any questions about your company's eligibility for a particular small business plan, please call one of our licensed representatives Mon - Fri, 5am to 9pm PT at 1-877-456-6670.

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L & M Tax Group, 420 Chinquapin Round Rd, # 2 i, Annapolis, MD 21401