Under The ACA
health care law contains tax provisions that affect employers.
The size and structure of a workforce - small or large - helps
determine which parts of the law apply to which employers.
Calculating the number of employees is especially important
for employers that have close to 50 employees or whose
workforce fluctuates during the year.
Two parts of the Affordable Care Act apply only to
applicable large employers. These are the employer shared
responsibility provisions and the employer information
reporting provisions for offers of minimum essential coverage.
The number of employees an employer has during the current
year determines whether it is an applicable large employer
(ALE) for the following year. For example, you will use
information about the size of your workforce during 2017 to
determine if your organization is an ALE for 2018.
Applicable large employers are generally those with 50 or more
full-time employees or full-time equivalent employees. Under
the employer shared responsibility provision, ALEs are
required to offer their full-time employees and dependents
affordable coverage that provides minimum value. Employers
with fewer than 50 full-time or full-time equivalent employees
are not applicable large employers.
WHO IS A FULL-TIME EMPLOYEE?
There are many additional rules for determining who is a
full-time employee, including what counts as hours of service,
but in general:
- A full-time employee is an employee who is employed on
average, per month, at least 30 hours of service per week, or
at least 130 hours of service in a calendar month.
- A full-time equivalent employee is a combination of
employees, each of whom individually is not a full-time
employee, but who, in combination, are equivalent to a
- An aggregated group is commonly owned or otherwise related
or affiliated employers, which must combine their employees to
determine their workforce size.
FIGURING THE SIZE OF THE WORKFORCE
To determine your workforce size for a year, you add your
total number of full-time employees for each month of the
prior calendar year to the total number of full-time
equivalent employees for each calendar month of the prior
calendar year and divide that total number by 12. If the
result is 50 or more employees, you are an applicable large
EMPLOYERS WITH FEWER THAN 50 EMPLOYEES
If an employer has fewer than 50 full-time employees,
including full-time equivalent employees, on average during
the prior year, the employer is not an ALE for the current
calendar year. Therefore, the employer is not subject to the
employer shared responsibility provisions or the employer
information reporting provisions for the current year.
INFORMATION REPORTING (INCLUDING SELF-INSURED EMPLOYERS)
All providers of health coverage, including employers that
provide self-insured coverage, must file annual returns with
the IRS reporting information about the coverage and about
each covered individual. The coverage is reported on a Form
1095-B, Health Coverage and the employer must also furnish a
copy of Form 1095-B to the employee by March 2, 2018 (this
date reflects a 30-day extension from the original due date of
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Certain employers may be eligible for the small business
health care tax credit if they:
- cover at least 50 percent of employees' premium costs
- have fewer than 25 full-time equivalent employees with
average annual wages of less than $52,400 in 2017
- purchase their coverage through the Small Business Health
Employers with fewer than 50 full-time employees or full-time
equivalent employees are not subject to the employer shared
EMPLOYERS WITH 50 OR MORE EMPLOYEES
All employers including applicable large employers that
provide self-insured health coverage must file an annual
return for individuals they cover and provide a statement to
Applicable large employers must
file an annual return--and provide a statement to each
full-time employee--reporting whether they offered health
insurance, and if so, what insurance they offered their
ALEs are required to furnish a statement to each full-time
employee that includes the same information provided to the
IRS by March 2, 2018. ALEs that file 250 or more information
returns during the calendar year must file the returns
EMPLOYER SHARED RESPONSIBILITY PAYMENT
ALEs are subject to the employer shared responsibility payment
if at least one full-time employee receives the premium tax
credit and any one these conditions apply. The ALE:
- failed to offer coverage to full-time employees and their
- offered coverage that was not affordable
- offered coverage that did not provide a minimum level of
Do you have personal or business questions about the
Affordable Care Act? Don't hesitate to call the office today at 301-657-8080.
DID YOU KNOW
that Sullivan & Company manages Pension Funds,
Retirement Plans & Taxable Accounts through Archer
Investment Corporation & Fidelity Investments for our
Fidelity is the custodian for more
retirement plans than any other custodian in the United
Let Sullivan & Company Analyze Your Asset Allocation
& Risk Tolerance for FREE!
Management at Sullivan & Co. CPAs
Sullivan leads our
Group and is here to help you navigate your
As Investment Advisor
Representatives, he and our Wealth Management team are able
to provide an independent opinion on the investments you
already own or are considering buying.
We can structure a portfolio
based on your risk tolerance or we can help you decide how
to invest in your company 401(k) plan.
We work with each
client to identify their concerns and to provide solutions
according to their situation.
is also experienced in company retirement plans. If you own
a business that does not have a plan; we can discuss your
options and set up a plan that fits your company.
If your business already has a
plan; we offer a free evaluation of the plan to ensure that
it is up to date and working well for you and your
Our goal is to provide personal, unbiased and independent
advice to help you make well-informed decisions about your
financial life and investments.
Contact Chris Bailey, CPA, MBA, IAR
or Paul Sullivan, CPA, IAR to set up a free
initial consultation (301) 657-8080.
And as always if you have any questions about accounting or
investments and how they effect you or your business, please
give us a call. We can help guide you in the right
you can call our offices if you have any questions about these
or any other accounting, tax, financial planning or insurance
related issues, at 301-657-8080.
Regards, Paul Sullivan, CPA, IAR
President, Sullivan & Company