The Impact Of Obamacare On Small Business Tax Liability

When Obamacare was implemented, there were certain penalties that business owners faced for noncompliance. One of the most costly penalties was for providing a health insurance plan whereby the employer reimburses the employee for the costs. The amount of the penalty can really add up, since it is assessed on an individual employee basis and is also a daily charge. At first, certain exceptions were put into place, presumably to give employers an opportunity to become accustomed to the new requirements. Many of these exceptions have, or will expire soon.

What this means for small business, and the impact Obamacare has on the tax obligation of a small business is:


  • At $100.00 per day, one employee could cost up to $36,500.00 a year in penalties!
  • The IRS claims the penalty can be assessed on plans that reimburse the employee for the costs of coverage.
  • The penalty can also be charged to a business that makes a direct payment to a provider, to cover the premium for an employee.


The downside to these penalties is that smaller businesses are no longer to avoid the hassle of searching for and contracting with a provider by way of offering a “plan”. For many small business owners, repayment allowed them to offer coverage without jumping through a provider’s hoops. The impact of exceptions expiring is that small businesses will now have to incur the administrative burdens associated with contracting for a healthcare plan, or face stiff fines. If there is a saving grace to this issue, it is that if only one employee participates in this type of arrangement, the penalty is no longer applies. For more information on how your small business can avoid tax penalties related to Obamacare, call our office.


If you have questions about taxes and whether a tax return for a deceased person is required, let the professionals at Nielsen Law Group help you negotiate with the IRS. Call (480) 888-7111 or submit a web request here.