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Affordable Care Act Updates for Your Small Business


Effective for 2014, the Affordable Care Act (ACA) implemented a number of changes which dictate the type of coverage any valid group health plan must offer.  On November 6, 2014, the Department of Labor (DOL) issued a set of Q&A responses to address restrictions resulting from the new ACA compliance requirements and how they impact small business owners. This additional guidance makes it clear that employer reimbursements/payments of health care premiums outside of an employer provided group health care plan fail to meet the requirements of ACA and can be subject to penalty of $100, per day, per employee, with only a few exceptions.

Please read below to determine if any of the DOL restrictions recently addressed impact your 2014 payroll and related payroll taxes. 

  • If you currently provide an ACA-compliant group health plan to your employees (i.e. Blue Cross Blue Shield, etc.), then your business is deemed compliant and no further action on your part is required.
  • If you currently do not provide any health insurance benefits to your employees, including reimbursing your employees for an individual health insurance policy, then your business is deemed compliant and no further action on your part is required. 
  • If any of the following scenarios pertain to your business, please contact your accountant immediately.  To avoid the penalty above, the health insurance reimbursements are considered taxable wages and will be subject to payroll taxes.  It is imperative that these payroll taxes be paid before year end to avoid payroll tax penalties.
    • Your business has more than one employee with an established Section 105 medical reimbursement plan (including Health Reimbursement Arrangements (HRA))
    • Certain or all employees have been reimbursed a portion of their individual health insurance policy premiums by your business (only applicable if > 1 employee)
    •  Shareholders of an S-corporation who own greater than 2% interest have been reimbursed for individual health insurance policy premiums (only applicable if >1 employee)

Note for 2015:  Starting in 2015 the ACA imposes additional requirements on large employers (>50 full time equivalent employees).  There are also additional reporting requirements that will go along with this.  Please contact your accountant for additional information if you are not familiar with these requirements.


For a printable copy of this letter, click here