Healthcare Basics for Employers with Fewer Than 25 Employees

Health care in the workplace continues to be an important issue for small businesses. Taking this into consideration, the Small Business Administration outlines the provisions that may impact employers with less than 25 employees to help navigate the changes in healthcare.

Small Business Health Care Tax Credit

The Small Business Tax Credit helps small businesses get affordable coverage for their employees especially for those businesses with low to moderate income workers.  As of 2014, this credit is available to qualified small businesses that purchase coverage through the SHOP Marketplace and may be worth up to 50% of the employer’s premium costs (35% for tax-exempt employers). The Tax Estimator Tool from helps you determine if you are eligible.

Small Business Health Options Program (SHOP)

If you are looking to provide coverage for your employees, you can do so through the Small Business Health Options Program. The SHOP is open to employers with up to 50 FTE employees and allows them to obtain a better choice of health plans. Moreover, if you meet the eligibility requirement and offer your employees coverage through the SHOP, you may qualify for the Small Business Tax Credit worth up to 50%.  To find out if you meet the size requirements for SHOP, use the SHOP FTE Calculator .

Summary of Benefits and Coverage (SBCs) Disclosure Rules

The Summary of Benefits and Coverage form explains what the plan covers and the costs. Employers are required to provide this to employees to help them better understand and evaluate the options available.

Flexible Spending Account Contributions

For a plan beginning on or after January 2013, the maximum amount an employee can contribute to health care flexible spending arrangements for any year is capped at $2,500. It is important to note that the limit only applies to elective employee contributions and does not extend to employer contributions.

Additional Medicare Withholding on Wages

Effective January 1, 2013, ACA increased the employee portion of the Medicare Part A Hospital Insurance (HI) withholdings by .9% (from 1.45% to 2.35%) on employees with incomes of over $200,000 for single filers and $250,000 for married joint filers.  It is the responsibility of employers to withhold this additional tax, which applies only to wages in excess of these thresholds. The employer portion of the tax remains unchanged at 1.45%.

New Medicare Assessment on Net Investment Income

A 3.8% tax will be assessed on net investment income including taxable capital gains, dividends, interest, rents, and royalties for taxpayers with Modified Adjusted Gross Income (MAGI) over $200,000 for single filers and $250,000 for married joint filers.

Workplace Wellness Programs

To encourage employers in promoting wellness in the workplace, the Affordable Care Act creates new incentives. Wellness programs require individuals to meet a specific health objective to reap rewards. For more information visit


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