If you’re a small business owner, you may be concerned about how the Affordable Care Act (ACA) may impact your business and your wallet. While the ACA seeks to change the health care landscape, the law actually helps small businesses more than hurts them.

So what exactly constitutes a small business under the health care law? If you have fewer than 50 full-time employees or equivalents, you are a small business, meaning you aren’t required to offer health coverage. If you opt to provide coverage, the ACA provides the following options for small business owners to make health insurance more affordable.

NOTE: For franchise owners, your employee count is calculated on an entity level. For example, if you have 5 franchise locations with 2 full-time employees at each location, you are seen as having 10 full-time employees under the Affordable Care Act.


The Small Business Tax Credit offsets the cost of employee premiums and applies to businesses with fewer than 25 full-time employees whose average annual income is less than $50,000 each. This credit is worth up to 50% of your premium costs. To qualify for the credit, you must use the SHOP Marketplace, which we’ll cover next, and file Form 8941.

SHOP, or Small Business Health Options Program, allows employers with fewer than 50 full-time employees or equivalents to research and view affordable health care options in one place. By purchasing coverage through the SHOP Marketplace, you may qualify for tax credits. Keep in mind that taxes and tax credits are based on your number of full-time employees and their income. There is no limited enrollment period for small businesses looking to enroll in SHOP coverage for their employees.  The enrollment period, effective date of coverage, and the new employee waiting period are established when the employer creates the enrollment criteria. 

NOTE: If you are self-employed and do not have any employees, you cannot use the SHOP Marketplace. Instead, you must purchase your health insurance coverage through the Health Insurance Marketplace.


If you have 50 or more full-time employees, visit our ACA Resources page to see how you may be affected.