Small Business tax on healthcare

Small Business tax on healthcare Reform

After more than a year and a half of uncertainty  and waiting for small business owners and employer on the associated tax on healthcare reform, and around the Affordable Care Act some clarity was finally provided a year and a half later  last week.

According to the proposed IRS regulation, Business owners and employer will be spared the massive  $2,000-per-full-time-employee health insurance tax penalty associated with not covering all full time employees, as long as they offer some sort of coverage to 95% of their full-time employees and their dependent under age 26.

Health Insurance Tax Penalty

Starting January 1, 2014 the Affordable Care Act imposes a penalty of up to $2,000 per full-time employee on all employers with 50 or more employees. The penalty appeared to have not taken into account all the various situations that can occur with fulltime employees, such as employees eligible for a federal premium subsidy, and uses the subsidy to buy coverage in a public health insurance exchange.

This was the most alarming prospect to employers, as without flexibility in terms of how the Health Insurance tax was levied, many employers feared facing massive charges for not providing coverage regardless of the individual employees scenario.

Below is the Statement from the Treasuring Department

“After further study and consideration of the comments, the Treasury Department and the IRS believe that they should exercise their administrative authority to allow recognition of a margin of error consistent with an intent to recognize the possibility of inadvertent errors together with the specificity and administrability of a specific percentage, and therefore have concluded that a clear and definitive 95 percent standard would be an administrable and appropriate interpretation of the statutory provision,” according to the proposed regulations.

This propose clarification gives employers some wiggle room to account for many of the different scenarios they might face with their employees.

Print Friendly

Fatal error: Uncaught Exception: 12: REST API is deprecated for versions v2.1 and higher (12) thrown in /home/lapeti6/public_html/iHealthcareupdates.com/wp-content/plugins/seo-facebook-comments/facebook/base_facebook.php on line 1273