How does the ACA assist small businesses that provide health insurance?

• A. Mandatory employer sponsorship refunds
• B. Increased payroll taxes
• C. Tax credits to small businesses to help make coverage more affordable
• D. Free coverage for all employees

Answer: (C)

The ACA uses a practical tool to help small employers afford offering health coverage: a tax credit that reduces the cost of premiums the employer pays for employees. This incentive is delivered as a credit against the employer’s payroll taxes, easing the financial burden of providing insurance. To qualify, a business is typically small (fewer than 25 full-time-equivalent employees), with average wages under a set limit, and it must cover at least half of the employees’ premiums. The credit amount can meaningfully lower the net cost of offering coverage, making it more feasible for small businesses to provide health insurance. This isn’t about refunds, higher taxes, or free coverage—it's about reducing premium costs through a targeted tax credit.