2014 Tax Returns
Small Business Health Care Tax Credit changes. The maximum credit you can receive for premiums you pay for your employees' health care coverage increases from 35 percent to 50 percent. If you're a tax-exempt business, the maximum credit increases from 25 percent to 35 percent. You can receive this credit for two consecutive taxable years.
To receive this credit, you must have fewer than 25 full-time equivalent (FTE)* employees whose average annual wage is less than $51,000. You must also pay at least 50 percent of employees' (not spouse or dependent) premiums for a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exception to this requirement.
*A full-time employee is defined as an employee who works on average a minimum of 30 hours per week.
2015 Tax Returns
Business health insurance requirement. Starting in 2015, businesses with more than 50 FTE employees in 2014 (or a combination of full-time and part-time employees equivalent to 50 FTE employees) must either offer a minimum level of health care coverage to employees and their dependents, or pay Employer Shared Responsibility payments to the IRS for any FTEs who purchase coverage through a marketplace and receive the premium tax credit.
Applicable large employers — those with 50 or more full-time employees, including FTE employees — will have annual reporting responsibilities concerning whether and what health insurance they offered to their full-time employees in 2015. Tracking this information is important because large employers may be subject to an employer shared responsibility payment if:
- Coverage was offered to fewer than 70 percent of the employer's full-time employees and their dependents in 2015 and at least one full-time employee enrolled in coverage through the Health Insurance Marketplace and receives a premium tax credit. Note that after 2015, the 70 percent threshold will increase to 95 percent.
- Coverage was offered to at least 70 percent (95 percent after 2015) of full-time their full-time employees and their dependents in 2015, but at least one full-time employee receives a premium tax credit because coverage offered was not affordable, did not provide minimum value or the full-time employee was not offered coverage.
All employers that provide self-insured health coverage must file an annual return reporting certain information for the individuals they cover. This applies to businesses of any size. The first returns are due to be filed in 2016 for the 2015 tax year.
The IRS will determine if any FTEs receive the premium tax credit and whether employers owe shared responsibility payments. Employers will be contacted by the IRS and have an opportunity to respond to the IRS before payment is assessed.
2016 Tax Returns
The small group marketplace, SHOP, will become available to employers with up to 100 employees in 2016.
For applicable large employers, the percentage of FTE employees that must be covered increases to 95 percent (from 70 percent previously).
2018 Tax Returns
Small Business excise tax on cadillac plans. Starting in 2018, employers must pay a 40 percent excise tax on high-value health insurance, also known as "Cadillac Health Plans." The tax applies to individual coverage that costs more than $10,200 for individual coverage or $27,500 for family coverage. These amounts are indexed to inflation and contain exceptions for high-risk professions and employers with a disproportionately older population.
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- ACA Tax Provisions for Employers
- Small Business Health Care Tax Credit for Small Employers
- Employer Shared Responsibility Provision (Video: 47 minutes)
- Information Reporting by Applicable Large Employers
- Information Reporting Requirements for Providers of Minimum Essential Coverage (Video: 35 minutes)