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If you are self-employed and shopping for health insurance, there are a few things you should know before choosing a plan. Under the Affordable Care Act (ACA), small businesses can get help providing health insurance to their employees through federal health care tax credits.

Self-Employed? Here’s What You Should Know About Health Insurance.

According to the National Federation of Independent Business, the #1 concern for small business owners is having access to affordable health care. The ACA has helped many small businesses provide affordable healthcare options to their employees by lowering premium cost growth and providing tax credits to qualifying business owners.

How Does the ACA Define a Small Business?

The ACA separates small businesses into four categories:

  1. Self-employed (no employees)
  2. Fewer than 25 full-time equivalent employees (FTEs)
  3. 25-50 FTEs
  4. More than 50 FTEs

Businesses with fewer than 50 FTEs are not usually required to offer health insurance to their employees.

Business with more than 50 FTEs are usually required to offer health insurance to their employees.

Which Employees Are Considered FTEs?

Full-time employees (individuals who work 30 or more hours per week).

The IRS states that “all employees of the eligible small employer are taken into account when determining FTEs and average annual FTE wages, including employees who terminated employment during the tax year, employees covered under a collective bargaining agreement, and employees who are not enrolled in health care coverage.”

Individuals who are not considered FTEs include:

  • Owners of the small business, including partners and shareholders owning more than 2% of an S corporation or more than 5% of a C corporation.
  • Spouses of owners, partners, and shareholders.
  • Family members of owners, partners, and shareholders.
  • Seasonal employees and contractors.

This calculator can help estimate your FTE credit.

Are you currently self-employed or thinking of starting your own business? HealthMarkets offers free services to help you explore your health insurance options. Call us 24/7 at (800) 976-5818, or find an agent near you today to get started.


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