The Affordable Care Act's Impact on the Self-Employed

Under the Affordable Care Act (ACA), much of the focus has been placed on businesses and how they must comply with the various mandates within the law.  Businesses are separated into two categories:

  • Applicable Large Employers – those employers that average 50 or more full-time equivalent employees per year.
  • Small Businesses – those employers that average fewer than 50 full-time equivalent employees per year.

But, what if you’re self-employed?  Individuals who work for themselves are not exempt from ACA mandates.  Self-employed individuals face the following choices:

  1. If married, investigate obtaining coverage through your spouse’s employer.  The self-employed spouse may find that he or she can be added to their spouse’s group coverage at a premium rate that will be less than contracting for individual coverage.
  2. Purchase health coverage from a private insurer or through the “Marketplace” (the governmental agency clearinghouse).  All coverage obtained through the Marketplace meets the Minimum Essential Coverage (MEC) requirement.  It will be necessary to inquire if the MEC is met when purchasing coverage from outside of the Marketplace.  While investigating coverage through the Marketplace, self-employed individuals may find that they are eligible for coverage provided under a government-sponsored plan (e.g., Medicare, Medicaid, and programs for veterans).  The Marketplace can be accessed at
  3. Decline to purchase coverage (in effect, self-insure for any healthcare expenditure).  This course of action will result in a “Shared Responsibility Payment” (SRP) that will be assessed against individuals who fail to maintain MEC (or have a coverage exemption).  SRPs are calculated with Form 8965 and its related worksheets.  For 2015, the SRP is either the greater of $325 per adult and $162.50 per child up to a maximum of $975 or 2% of annual household income (that is above the tax filing threshold).  These rates will climb in 2016, where non-coverage will require payment of the higher of either:  2.5% of annual household income (above the filing threshold) or $695 per adult/$347.50 per child (up to a maximum of $2,085 per year).  The SRPs are paid with a person’s annual individual income tax return.

The open enrollment period of 2015 is closed, unless you have a specific life event that makes you eligible.  Open enrollment for 2016 coverage will begin on November 1, 2015.

You can’t ignore the Affordable Care Act.  Action and decisions are required, with fees likely to follow whichever path you take.   As with all things tax-related, it’s best to have all the necessary information in addition to trusted advisors in order to make the best choices.

Contact SD Medallion Services for more information on this topic and visit our tax blog to read more articles on related topics.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Tax Reform 2021 - Build Back Better: Excess Business Losses Further Limited than Under 2017 Tax Cut and Jobs Act
Tax, Tax Reform BY Kirk Mitchell
Tax Reform 2021 – Build Back Better: Proposed Changes to Increase Net Investment (NII) Income Tax on S Corporation Shareholders and Limited Partners
Tax, Tax Reform BY Kirk Mitchell
Tax Reform 2021 – Build Back Better: Temporary Rule for S-Corporation Conversions to Partnerships
Tax, Tax Reform BY Kirk Mitchell
Tax Reform 2021 – Build Back Better: Surcharge on High Income Taxpayers and its Impact on Capital Gain Rate Taxes and Planning
Proposed Legislation Targets Estate and Gift Tax Planning
Tax, Tax Reform BY Kirk Mitchell
Tax Reform 2021: Build Back Better Act Update as of Wednesday September 15, 2021
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.