The Nanny Tax: How the Affordable Care Act Could Affect You

by admin 29. October 2013 18:15

The Affordable Care Act (ACA) implementation begins October 1 with the nationwide opening of Healthcare Exchanges or Health Insurance Marketplaces. Currently there are more questions than answers available, but we will provide updates as we receive them. At this time we know the following to be true: Household employers are not required to provide health care insurance to their employees, nor are they required to pay any of the premium for their employee. If they chose to do so, there may be tax credits available to offset the cost to the employer.

What’s New for Employers:

Employers are required to provide written notice to employees regarding insurance coverage options on the new Health Insurance Marketplaces. The US Department of Labor provides two sample notice forms that you can use (please provide your employee with the applicable notice): -Use this notice if you WILL NOT be providing employee health insurance Complete the information on page 2 and give the notice to your employee. -Use this notice if you WILL be providing employee health insurance Complete the information on pages 2 and 3 and give the notice to your employee.

Employer tax credits will be available for small employers that meet all of the following conditions.
-The employer must have fewer than 25 full-time equivalent employees (FTEs),
-The average annual wages must be less than $50,000 per full-time equivalentemployee (FTE),
-The employer must contribute at least 50% of the total health care insurance premium for each enrolled employee, and
-The employer must purchase health insurance through the Small Business HealthOptions Program (SHOP) in order to qualify for tax credits. 

 The maximum credit possible in 2014 for a small employer is 50 percent of the employer contribution to qualified health coverage premiums. We are still waiting for more information from the IRS on the mechanics of claiming the credit for household employers.

What’s New for Employees:

1. Household Employees are required to have health care insurance that meets government standards no later than January 1, 2014, which is the same requirement for other individuals. Any individual who does not have a qualified health care insurance plan will be required to pay the Individual Mandate Excise Tax on their personal income tax return. For 2014 this tax is $95 per person but this tax will increase each year.

2. Tax credits are available to lower income individuals and families who purchase individual/family health care insurance on the insurance exchanges to help make the insurance policy more affordable. For more information about the Affordable Care Act (ACA), please call 1-800-318-2596 or visit and you will be directed to your state marketplace. 

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