Innovative Strategies For Winning Tax Controversies, Business Structuring And Estate Planning

Employers – are you stuck with “Obamacare

by | Feb 15, 2013 | healthcare, income taxes, Obamacare, Tax


Obamacare is a disaster for employers that have low wage employees. Frankly, many companies will need to change how they conduct business in order to stay competitive.

Number of Employees

Does your business have emough employees to be subject to the pay-or-play Obamacare tax? This is called the shared responsibility requirement forcing employers to pay a huge penalty or provide health insurance.

50 Employee Requirement. The simple definition is employers with 50 or more full-time equivalent workers. Unfortunately, this is only a partial answer.

The tricky term,  full-time equivalent (FTE) covers employees who average 30 hours per week.
Note: the normal 40 hour per week definition for full time is not applicable.

The time period is the prior year. Since the mandate begins in 2014, the year 2013 controls the determination of the number of employees. There are some exceptions for seasonal workers, but this is very tricky. IRS Notice 2012-58 details some of the exceptions.

If your business is hovering around the 50 employee mark, the smartest move may be to fire employees and get below 50 employees in 2013. Other moves might be to outsource work currently performed by employees to other companies (whether in the US or abroad.) For example, a fast food restaurant might fire its maintenance employees and hire an outside janitorial company.

There are many more requirements. Before anymore time passes, call your tax attorney.

Ronald J. Cappuccio, J.D., LL.M.(Tax)