Tax Prep & Planning

Healthcare Tax Reporting and Payment Requirements for Employers

With the upcoming open enrollment period for Marketplace insurance approaching on Nov. 1, you may question the healthcare tax implications as an employer, including the enrollment and reporting requirements.

Can Small Businesses Purchase Marketplace Insurance?

Yes, under the Affordable Care Act, the SHOP Marketplace was established to help small-business employers with 50 or fewer full-time equivalent employees offer healthcare insurance to their employees. (SHOP Marketplace plans are different from the standard Individual & Family plans.)

Does the Size of My Company Make a Difference?

Here are the healthcare tax coverage, reporting, and provisions for large and small companies, according to the IRS:

Large Companies (50+ Full-Time Employees, Including Full-Time Equivalent Employees):

Reporting:

  • You must withhold and report an additional 0.9% on employee wages or compensation that exceeds $200,000 for the year.
  • If you have 250 or more full-time employees, you need to report the value of the health insurance coverage provided to each employee via Form W-2.
  • You must file an annual return, Form 1095-C, reporting whether and what health insurance (including self-insured coverage) you offered your employees.

Payment & Provisions:

  • You must either offer affordable minimum essential coverage that provides minimum value to your full-time employees (and offer coverage to the full-time employees’ dependents), or potentially owe an employer shared responsibility payment.

Small Companies (Less Than 50 Full-Time Employees):

Reporting:

  • If you provide self-insured health coverage to your employees, you must file an annual return (Form 1095-C) for each employee covered.
  • You must withhold and report an additional 0.9% on employee wages or compensation exceeding $200,000.

Payments & Credits:

  • If you cover at least 50% of your full-time employee’s premium costs and you have fewer than 25 full-time equivalent employees, you may be eligible for the Small Business Health Care Tax Credit.
  • For more information, visit the Small Business Health Care Tax Credit Estimator.
  • If you self-insure, you may need to pay a fee to help fund the Patient- Centered Outcomes Research Trust Fund. The fee is paid annually using Form 720, Quarterly Federal Excise Tax Return. The payment, paid through the Electronic Federal Tax Payment System (EFTPS), should be applied to the second quarter (in EFTPS, select Q2 for the Quarter under Tax Period on the “Business Tax Payment” page).

(Note: If you have fewer than 50 employees, but are a member of a group with a certain level of common or related ownership with 50 or more full-time employees, including full-time equivalent employees, you are subject to the rules for large employers.)

Where Can I Go for More Information on Healthcare & Tax?

Still have questions? View more information on the IRS website at www.irs.gov/affordable-care-act/employers. Additional information for employers regarding the Affordable Care Act can be found at www.healthcare.gov.

Need extra support with healthcare tax obligations and reporting? Speak directly with an experienced tax advisor. Find a Block Advisors office nearest you.

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