The National Federation of Independent Business has stated that under the Affordable Healthcare Act, better known as Obamacare, individuals face a penalty for not buying health insurance. But now even small businesses that choose to jump through hoops to help workers pay for health care costs could face penalties.

A new IRS regulation that went into effect July 1st could impose a fine of $100 per day per worker—up to $36,500—for businesses that provide tax-free assistance with workers’ individual health insurance premiums or medical costs. The regulation would cost businesses over 18 times more than the Obamacare penalty for larger businesses not providing health insurance for employees. That amount is just $2,000, said Kevin Kuhlman, NFIB Director of Legislative Affairs, in a conversation with radio host Frank Beckmann on WJR in Detroit.

According to NFIB research, 1 in 7 non-offering small businesses have these policies in place—and the IRS regulation could mean cost increases for hundreds of thousands of workers. You can read the full Article Here.

What does this mean for Business Owners?

The penalties alone could completely collapse a Small Business. So it seems that the “pay-or-play” conditions may not apply to just larger businesses any longer.  Here’s an indicative example. Even if you manage to keep the number of “full-timers” under the law-requirement-radar, with the minimum of 50 full time staff, the introduction of “part-timers” as the FTE (full-time-equivalent) can get you pretty close to the very edge of the “pay-or-play” Obamacare guidelines.

Essential Tasks for Obamacare Compliance

The very first thing the IRS is eager to find out about your company is, whether or not you’re large enough to qualify for the “pay-or-play” process. In addition, you need to make it clear what kind of health insurance you provided for your full-time workers, including their dependents. This is only the beginning of the “tracking” trouble. You’re also required to identify your full-time staff, and closely follow the health coverage, for each and any month in 2015. The required forms from the IRS are:

  • Form 1094-B or The Transmittal of Health Coverage Information Returns Form
  • Form 1095-B or The Health Coverage Return Form
  • Form 1095-C or The Employer-Provided Health Insurance Offer and Coverage Form

According to the IRS, Form 1094-B is brief and features basic employer information and states the number of copies of 1095-B that accompany the transmittal. The 1095-C is also a basic form. It requires you to fill it out every month for each employee that you offer and provide coverage of insurance. Information Reporting on Health Coverage by Employers (Section 6056) and Information Reporting on Health Coverage by Insurers (Section 6055) are the Internal Revenue Service Codes that cover the reporting requirements and can be found on their website.

In case, you are not able to survive the bumpy ride through the IRS maze of requirements and forms, there’s always a solution to making sure you’re in compliance with the Obamacare regulations, consult a professional.  The last thing you need is to find out you were not in compliance and pay the IRS the steep Obamacare Compliance Penalties putting your business at risk. Holdsworth & Co., CPA’s provide guidance in all IRS measures for your business and are here to help! Contact us for a free consultation.