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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Mom and Pop Business

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Question: I am the sole shareholder and employee of my home-based marketing services business, set-up as an S-corporation. I pay my husband, as an independent contractor, sales commission (about $30k/yr) for projects he brings to the company. I have been buying individual medical insurance for our family of 4 (incl 2 small kids) from Anthem. For 2014, should I buy insurance through the small business exchange, or as individual insurance? I am confused as to whether the small business tax credits are a better “deal” than the subsidy. I anticipate a $50k 2013 household income and perhaps $60k for 2014.

Answer: Your only option is the individual exchange. Covered California SHOP has ruled that at least one employee must be on payroll to be eligible and that employee cannot be a family member. See comments for additional details.


Generally, the SHOP conforms to CA small group rules when it comes to participation requirements. The employer can choose to include all part-time workers with at least 20 hrs per week

as i understand, in order to eligible for Shop, you need at least one employee. On the ShopFAQ page, the definition of employee seems to refer us to ERISA. I don’t think ERISA sets a minimum number of hours per week to define an employee. Can one hire someone for 1 hour per week, then be eligible for Shop, and then include oneself, one’s own spouse the employee and their spouse?

Section 45R of the IRC does not count family members (i.e. spouse) as employees thereby eliminating the potential for any small business tax credit.

Additionally, representatives from the CA SHOP program informed me that an “owner-spouse” small business cannot purchase a small group insurance plan even if the spouse is a W-2 employee.

The “short term” solution would not necessarily be viable in terms of obtaining a tax credit, because the employee’s total income, including commissions, is what determines the business’ eligibility for the tax credit.

Your business is already eligible for a small business group plan through many insurance companies, because self-employed husband-wife combos generally count as a group of two.

We were told by Kaiser that if the “employee on payroll” is a Spouse, it still won’t qualify them for SHOP, is that correct?

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