ACA FAQs

Does health care reform allow people to keep their current health coverage?

• Yes. Nothing in the new law requires individuals to terminate coverage that they had on the date the law was passed. 

Am I required by law to offer health coverage to my employees?

• The health care reform law technically does not require companies to offer health coverage to their employees. Beginning in 2014, large companies that do not offer a minimum level of coverage will be subject to penalties if any of their employees receive government subsidies for health coverage through an exchange. Large companies will also be subject to penalties if they do offer the minimum level of coverage and any employee still receives subsidized coverage through an exchange. Those penalties will not apply to small employers having fewer than 50 full-time equivalent employees on business days in the prior calendar year. 

What are the penalty amounts for large employers that don’t offer coverage?

• Large employers that do not offer coverage will be subject to an annual penalty of $2,000 per full-time employee, excluding the first 30 employees, if any of their full-time employees receive subsidized coverage through an exchange.

What are the penalty amounts for large employers that offer coverage and have employees who receive subsidized coverage through an exchange?

• Employers are subject to a penalty of $3,000 for each full-time employee that receives subsidized coverage through an exchange. The maximum penalty is the amount equal to $2,000 times the number of full-time employees, excluding the first 30 employees.

What is the small business tax credit and how do I know if I am eligible?

• Beginning with the 2010 tax year, tax credits were available to qualifying small businesses that offer health insurance to their employees. A business qualified for the credit if it covered at least 50 percent of the cost of health care coverage for workers, pay average annual wages below $50,000 and have less than the equivalent of 25 full-time workers.
• The size of the credit depends on your average wages and the number of employees. For tax years beginning in 2010 through 2013, the maximum credit is 35 percent of the employer’s premium expenses that count toward the credit. The full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

What if my small business doesn’t offer insurance today, but I choose to start offering insurance this year?  Will I be eligible for these tax credits?

• Yes. The tax credit is designed to both support those small businesses that provide coverage today as well as those that newly offer such coverage.