Real Questions, Real Answers

Q: I’m a single member LLC electing to be taxed as an S-corp. My company applied to the SHOP program and was denied because I am the only employee of the S-corp. Apparently you (nor your spouse) qualify as an employee for the purposes of SHOP (or so I was told by a SHOP representative responding to my application). Are you aware of any legislation that clearly outlines than an owner (without any other employees) would not qualify for SHOP? What alternatives do I have?

The plans on the SHOP marketplace are for employers who want to offer coverage to their employees through small group plans. Since you don’t have any employees, you are considered self-employed and should sign up for coverage on the individual marketplace. has a great explanation of how self-employed individuals can take advantage of the benefits in the individual marketplaces, including tax credits to lower premium costs at:


Q: Since I am self employed and was concerned about the percent of subsidies I took, I called the healthcare exchange, and was told I could not change the percent even if needed to help prevent me from possibly owing a lot. What can be done about this? This is an obvious concern for many self employed that are taking subsidies.

Taking less in monthly subsidies and receiving a payout after their taxes are reconciled is the best bet for self-employed individuals who are worried they might make more than they initially projected and owe subsidy money back to the government. Once you tell the marketplace what your projected salary is they’ll calculate your subsidies, or Advanced Premium Tax Credit (APTC). You can then choose how much of that to take each month, and could choose to receive less than what is allotted if you are concerned about making more than anticipated. When your taxes are reconciled at the end of the year, if you made roughly what you predicted, you’ll get the remainder of the APTC that you didn’t take as part of your annual tax return. If you made significantly less than what you predicted, you’ll get the remainder of the APTC and then some. And if you do end up making a lot more than predicted, the amount they’ll need to pay back (or subtract from the amount of their tax return) will be less than if you took the whole APTC each month.


Q: In 2013, my husband and I were both employed and on company-provided health insurance. In 2014, we are both unemployed and starting our own business. What income will be used to figure out if we qualify for Obamacare subsidies? Our 2013 income will be too high but as of 2014 our income will fall dramatically due to self employment.

In the healthcare marketplace, you may qualify for subsidies to help lower your monthly premiums. The amount of subsidies you will initially receive is based on what you estimate your income for the year will be when you sign up for the marketplace. You will receive those subsidies for the year, but must reconcile whether or not you were actually eligible for the subsidies when you submit your taxes. At that time, you will owe money back to the IRS if you made more than you projected when you signed up on the marketplace, or will receive an additional payout in subsidies if you made less.

To see the amount of subsidies you’re eligible for when you fill out your Marketplace application. The prices you will be shown for insurance plans will reflect the subsidies you qualify for based on your income. If you would like to see what you might pay for insurance on the Marketplace prior to signing up, you can get an estimate of what your potential costs and savings might be using‘s premium estimator tool or the Kaiser Family Foundation’s subsidy calculator.


Q: What happens with premium tax credits if a couple gets divorced? If the premium tax credit is based on the previous year’s income when the couple filed taxes jointly, many wouldn’t qualify. But once someone is divorced, one individual might have little income. What is the subsidy based on in that situation?

If a couple divorces, each person’s eligibility for premium tax credits will generally be based on his or her own annual income. The former spouse’s income won’t be counted, even if the couple filed taxes jointly the previous year.

Premium tax credits are available to people with incomes up to 400% of the 2013 federal poverty level ($45,960 for an individual).

During the application process, people are asked to project their income for the year. If someone estimates income that’s more than 10% lower than the previous year’s taxes or wage information or Social Security data would suggest, the system will flag it.

“If there’s a discrepancy, the system will require [the applicant] to provide documentation of the reduced income,” says Jennifer Tolbert, director of state health reform at The Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.) The documentation could take different forms, such as a current pay stub.

At tax time next year, the Internal Revenue Service will reconcile an individual or family’s actual income against the amount that was projected. People who received too much in tax credits may have to repay some or all of it. The situation may be different for couples that are separated but not yet divorced, however. If each files taxes as “married filing separately” neither will be eligible for premium tax credits on the exchange.


Q: If an employer offer a defined HRA contribution to an employee (and family, if they chose), can the employee still access the affordability credits in the Individual Marketplace? If yes, how does the HRA contribution impact the credits? Isn’t the employee ‘double dipping’ by getting money from an employer and getting the credits?

A health reimbursement arrangement (HRA) is an employer-funded spending account that can be used to pay qualified medical expenses. A HRA is 100% funded by the employer.

Employers can no longer offer “stand-alone” HRAs for active employees. HRAs may only be integrated with group health coverage, not with individual policies.  This applies for plan years beginning in 2014.  This prevents employers from using HRAs to reimburse employees for individual health insurance policies they buy either in the new health insurance marketplaces or outside it.


Q: Can an employer enroll just their one employee in a SHOP plan during the one month “no minimum participation” period?

Yes, as long as this employee is not the spouse of the owner than they would be considered a small group and could buy during the “no minimum period”.


Q: Will small businesses with 50 or more employees have to file something with the IRS for the 2015 calendar year in regards to the employer shared responsibility provision under the ACA?

According to IRS regulations, businesses with 50 or more employees are required to file something for the 2015 calendar year. These businesses will not be subject to penalties, but will have to certify that:

  • They employ 50-100 employees
  • They haven’t reduced the number of employees or reduced their hours
  • They haven’t reduced or eliminated health coverage

These businesses will still need to file the large employer forms 1094c and 1095c for 2015. Check out a list of IRS regulations and this ACA Q&A for more information.