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Affordable Care Act: Key Requirements for Small Businesses

What is the Affordable Care Act?

The Affordable Care Act (also known as Obama Care) is a set of health insurance reforms that started in 2010. The Affordable Care Act includes a variety of provisions that reform the insurance market and encourage small businesses to offer health insurance. Depending on whether you are self-employed, an employer with fewer than 25 employees, an employer with fewer than 50 employees, or an employer with 50 or more employees, different requirements of the Affordable Care Act may apply to you. Learn about the key requirements of the Affordable Care Act based on the size of your business below.

How does the Executive Order signed by President Trump impact the Affordable Care Act?

On January 20, 2017, President Trump signed an Executive Order, which delegates authority to the Secretary of Health and Human Services and the heads all other executive department and agencies, such as the IRS, to utilize their authority to "minimize the unwarranted economic and regulatory burdens of the Act".

So what does this mean? For starters, Executive Orders are a formal announcement, allowing the president to communicate a message across multiple executive branches. This specific Executive Order places a "freeze" on any pending legislation relating to the ACA, allowing further review by responsible agencies. It does not however, repeal the Affordable Care Act. All mandates continue to be in effect, until further guidance is issued stating otherwise.

What if I'm Self-Employed?
If you're self-employed with no employees, you're not considered an employer. For complete details, please visit or click here.

You can post a question and see community discussions by visiting our TurboTax AnswerXchange here.

What if I Have Fewer than 25 Employees?

Businesses with fewer than 50 full time equivalent employees are exempt from penalties; however, you may qualify for employer health care tax credits. For complete details, please visit or click here.

What if I have Fewer than 50 Employees?

Businesses with fewer than 50 full time equivalent employees are exempt from penalties (also known as the Employer Shared Responsibility Payment or "Play or Pay" penalty) faced by larger employers that do not offer coverage. However, employers who are close to reaching 50 full time equivalents are encouraged to closely monitor their workforce, as reaching the threshold and not offering health care coverage can result in steep penalties. For complete details, please visit

What if my business has 50 or more employees?

Many important parts of the health care law apply to businesses with more than 50 full time equivalent employees. Under the health care law, employers with 50 or more full time equivalents are considered "large businesses" and therefore required to offer employee health care coverage, or pay a penalty. Large employers will also be required to comply with a second mandate, which is to report to the IRS on the employee health coverage offered or not offered. Initial reports will be due by January 31, 2016, for the 2015 tax year. For complete details, please visit

Can I get tailored information for my business?

The U.S. Government has created a new tool, which allows you to input your location, company size and current insurance plans to receive personalized information about changes under the law, important dates to remember, and the formulas for determining requirements and penalties. To access the tool please visit or click here.

Provision Timeline

Numerous provisions have surfaced from the Affordable Care Act (ACA), since being signed into law in 2010. Learn how these now active and upcoming provisions impact you.


Small Business Tax Credits

Starting in 2011, small businesses with less than 25 employees, pay an average annual salary below $50,000, and contribute 50% or more toward employees' health premiums may qualify for a small business tax credit. To learn more, click here.


Health Plan Reporting on Forms W-2

Starting in 2012, Employers filing 250 or more W-2's are now required to report the cost of employer-provided health coverage on employee W-2's (these would first be provided to employees in January 2013 for the 2012 tax year). The health care cost amounts reported on the W-2 are informational and not taxable to the employee. This mandate is intended to help employees better understand health coverage costs offered by their employer.
Using QuickBooks Payroll? Click here to learn the setup steps.

Medical Loss Ratio (MLR) Rebates

Starting in 2012, insurance companies must spend at least 80% of premium dollars on medical care rather than administrative costs. Insurance companies that do not comply with this rule are required to provide rebates to plan participants, typically the employer sponsoring the group plan.

Using QuickBooks Payroll and want to know how to record your MLR rebate? Click here for details.


Additional Medicare Tax Withholding on Employee Wages

Starting January 1, 2013, the Affordable Care Act increases the employee portion of the Medicare tax to 2.35% vs. 1.45% on earnings over $200,000 for single filers, and $250,000 for married joint filers. Employers are obligated to withhold this additional tax. Using QuickBooks Payroll? Click here to learn the setup steps.

Employee Notice of Coverage Options

As an employer, you must provide notification to your employees of coverage options available through the Marketplace. You are required to provide this notice to all current employees, and to each new employee beginning October 1st, 2013, regardless of plan enrollment status or full or part-time employment. The Department of Labor has provided two sample notices which employers may use to comply with this regulation. One notice is for employers who do not offer a health care plan and the second for employers who offer a health care plan. For additional details, please click here.


Individual Mandate "Play or Pay"

Beginning in 2014, the Individual Mandate (part of the Affordable Care Act) will require most individuals to have health insurance for themselves and their spouse and/or dependents. The requirement is for each individual to have minimum essential coverage, or pay a potential penalty. For additional details, please click here.

Small Business Health Options Program (SHOP) and Individual Marketplaces

Coverage through Marketplaces for individuals and small businesses will be in place January 1, 2014, with enrollment beginning October 1, 2013. For additional details, please click here.


Employer Shared Responsibility "Play or Pay" Mandate

Under the Affordable Care Act, employers with 50 or more full-time (and full-time equivalent) employees (referred as Applicable Large Employers or ALEs) must make an offer of health care coverage to their full-time employee and dependents or face a penalty. This penalty may apply if you do not offer health coverage or the coverage is deemed unaffordable and does not provide minimum value.

*On February 10, 2014, the IRS and Treasury issued final guidance on the Employer Shared Responsibility mandate. In these final rules, the mandate is delayed for a second time for certain employers. Those with 50 to 99 FTE's will now have until 2016 to comply, while employers with 100 or more FTE's will be required to comply starting in 2015. To avoid a penalty for failing to offer health insurance coverage, employers with 100 or more FTE's (who need to comply starting in 2015) need to offer coverage to 70% of their FTE's in 2015 and 95% in 2016 and beyond.

Need more information on this mandate? Be sure to read our ACA: Employer Mandates article for additional details.

Employer Information Reporting Mandate

Beginning in 2015, employers with 50 or more full time (and full time equivalent) employees will be required to furnish an annual report listing health care costs. Reporting will be required for the 2015 calendar year, and will be due by January 31, 2016. The Treasury is expected to announce the details on the reporting mandate later this summer. For additional details, please click here.

* On March 5, 2014, the IRS and Treasury issued final guidance on the Employer Reporting mandate. In these final rules, the mandate requires employers with 50 or more full-time employees, (including full time equivalents) to report to the IRS on the health insurance coverage offered (or not offered) to employees. This mandate is effective starting in 2015, with initial reports due in 2016, using Form 1094-C and Form 1095-C. Due to the HR/benefits information needed to complete these forms, Intuit Payroll Services will not support either form.

Need more information on this mandate? Be sure to read our ACA: Employer Mandates article for additional details. 


Qualified Small Employer Health Care Arrangements (QSEHRA)

A new plan was introduced, allowing certain small employers to reimburse employees for healthcare coverage purchased through the individual market. Complete details can be found on this KB article: Desktop Payroll: Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).


Excise Tax on Cadillac Plans

Under this provision, if the combined cost of applicable employer-sponsored coverage provided to an employee exceeds the legal dollar limit, which is revised annually, the excess is subject to a 40 percent excise tax. Although initial guidance has been issued, many of the requirements are still being developed. This section will be updated as new information is released.

Resources for Employers


Want Us to Alert You of Changes?

We offer additional resources that cover FAQ's, employee coverage options and even a place to sign up for alerts. Click here for more details.

Note: We've got you covered! We are committed to keeping you informed on payroll changes that impact your business. Make sure to check back often, as we will continue to update this page as new details surface.

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