Benefits of the ERTC and the Affordable Care Act for Business

September 25, 2023
Dayes Law Firm

As a business owner, it’s beneficial to become aware of legislation that changes how your business runs. When the Affordable Care Act (ACA) passed in 2010, many small businesses that previously couldn’t afford to provide healthcare to their employees could offer that benefit.

Similarly, when the Coronavirus Aid, Relief, and Economic Security (CARES) Act established the Employee Retention Tax Credit (ERTC) in 2020, struggling employers could afford employee wages again during the height of pandemic-related shutdowns.

The ERTC and the Affordable Care Act work together to provide substantial benefits for businesses. 

What Is the ERTC?

When COVID-19 was at its worst in 2020 and 2021, businesses suffered. The CARES Act introduced the ERTC, a refundable tax credit, to incentivize businesses to retain employees during this period of hardship. 

To qualify, your business had to pass one of two tests: the gross receipts test or the suspension of regular activity test. 

The gross receipts tests required a:

  • 50% loss in 2020 revenue compared to the same quarters in 2019
  • 20% loss in 2021 revenue compared to the same quarters in 2019

To qualify for the ERTC under the suspension of activity test, you must have suspended regulation operations due to a government order. This could include a change in business hours, social distancing, or slowing of the supply chain.

What Is the ACA?

Before the Affordable Care Act of 2010, many small businesses did not offer health coverage to their employees. The Employer Shared Responsibility provision of the ACA required businesses with 50 or more full-time employees to provide healthcare. 

The ACA created the Small Businesses Health Options Program, which made healthcare plans affordable for small businesses. 

By offering a plan under the ACA, employers can qualify for premium tax credits like the Small Business Health Care Tax Credit.

Under the ACA, employers must:

  • Provide information about the Marketplace to employees
  • Offer employees a standard “Summary of Benefits and Coverage”
  • Provide coverage to all eligible employees

Benefits of the ERTC and ACA 

To participate in the ERTC and comply with the ACA, you have to do some extra work as an employer. However, numerous benefits come with the ERTC and Affordable Care Act. 

Steady Wages for Employees

The ERTC provided funding to continue paying employees. While many businesses had to shut down, cut wages, or lay staff off during the pandemic, the ERTC prevented those measures.

This keeps morale up in the workplace, helps with employee retention, and aids you in building a consistent, quality team. 

Expanded Healthcare

Healthcare was more important than ever in 2020 with the onset of Covid-19. The ACA helps small businesses provide this to their employees. This improves employee satisfaction. 

Workplace Wellness

The ACA incentivizes business owners to establish workplace wellness programs. With proof that employee health has improved since the implementation of the programs, businesses can collect 20% to 30% of health coverage costs.

Payment for Health Plans

Healthcare expenses are qualified wages under the ERTC. This means you can claim them and receive credit. While the ACA made healthcare more affordable for small businesses, the ERTC rewards businesses for providing that healthcare.

Do You Have ERTC Questions? Contact Dayes Law Firm

You can still reap the benefits of the ERTC and Affordable Care Act. It’s not too late to file for the ERTC; you can retroactively file up to three years after you originally filed your taxes. 

Our ERC recovery refund lawyers here at the Dayes Law Firm have helped businesses claim ERTC benefits. Contact us at 800-503-2000 for a free consultation today.