Skip to content
Health

Is my small business exempt from ACA’s mandate?

Question: I am so confused. We have a small business, four employees. I have always paid for individual plans for all of us; we are young and have been healthy. They bring their bills each month and I pay it. In talking with one of my customers (also a small business owner) they told me I can no longer do this, that I could be fined $100/day. Can you explain this? I did some research. I am not a tax person and I am confused.

    by Robert I. Field, Ph.D., J.D., M.P.H., Professor, School of Law & Drexel School of Public Health
    Published 

Question: I am so confused. We have a small business, four employees. I have always paid for individual plans for all of us; we are young and have been healthy. They bring their bills each month and I pay it. In talking with one of my customers (also a small business owner) they told me I can no longer do this, that I could be fined $100/day. Can you explain this? I did some research. I am not a tax person and I am confused.

-Anonymous

Answer: Dear Anonymous,

Since your business has fewer than 50 employees, you are exempt from the ACA's mandate to provide health insurance. There is no penalty for continuing the arrangement you describe.

However, covering your employees with a group plan rather than paying for their individual policies could provide two advantages. Since your company has fewer than 25 employees, you may be eligible for a subsidy under the ACA to help with the cost. And they would avoid income tax on amount you pay in premiums on their behalf.

Robert I. Field, Ph.D., J.D., M.P.H. is a professor of law at the Drexel University School of Law and professor of health management and policy at the School of Public Health at Drexel University. Rob and the expert panel of The Field Clinic blog are available to respond to your questions on health care.