The Affordable Care Act introduced various tax provisions that impact individuals, families, businesses, and organizations. These provisions influence how taxes are filed and include benefits for employers and employees.

Small businesses and tax-exempt organizations may qualify for a tax credit to help cover health insurance costs for employees. The credit can be up to 50% of employer-paid premiums for small businesses and up to 35% for tax-exempt employers. To be eligible, businesses must:

Eligible employers must complete Form 8941 to claim this credit.

Employers can offer tax-free health coverage for employees’ children under 27. This benefit applies to various employer-sponsored and self-employed health plans. Employees can make pre-tax contributions for their child’s coverage, and the cost remains exempt from income, Social Security, and Medicare taxes.

Employers must report the cost of employee health coverage on Form W-2 (Box 12, Code DD). This reporting is for informational purposes only and does not affect taxable income. The goal is to provide employees with insight into their healthcare expenses. Some employers may qualify for temporary exemptions from this requirement.

A 0.9% additional Medicare tax applies to income exceeding specific thresholds:

Employers must withhold this tax on wages exceeding $200,000 per employee in a calendar year. Self-employed individuals must account for it when filing their tax returns.

These provisions ensure compliance and provide financial support for health coverage. Understanding them can help businesses and individuals maximize benefits and meet tax obligations effectively.