Employee Benefits & Taxes
Under current tax law, most employee benefits are not subject to federal, state and FICA taxes resulting in significant savings to both employers and employees. It is important that employers understand these provisions and their responsibilities for documentation, non-discrimination and associated testing required to receive this favorable tax treatment. We can help you understand these rules, make sure you are taking advantage of this benefit, and provide you with the appropriate documentation and testing. Contact us for more information.
The Affordable Care Act (Obamacare) added more taxes, credits and penalties that will play into your decision to offer healthcare coverage to your employees.
Small Business Healthcare Tax Credit
The Affordable Care Act provides a tax credit to help small businesses and tax-exempt organizations to afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is available to employers with 25 or fewer employees that pay at least half the cost of single coverage.
For tax years 2010 through 2013, eligible employers may be eligible for a tax credit of up to 35% of the employer’s contributions to employee premiums. Beginning in 2014, eligible employers may be eligible for a tax credit of up to 50% of the employer’s contributions to employee premiums provided they purchase qualifying coverage in an Exchange.
We can help you determine whether you qualify for this credit and calculate the savings for you.
Play or Pay Penalty
Under the Affordable Care Act, beginning in 2015 employers with 50 or more full-time equivalent employees that do not offer qualifying healthcare coverage to their employees will pay a penalty of $2,000 per full-time employee. The penalty will be payable monthly on a pro-rated basis and is an after tax expense. Employers on the cusp, or just above it, and those with large part-time staffs will be impacted by this penalty in particular. We can help you analyze the impact of "Playing or Paying" on your company.