The Affordable Care Act was passed in 2010, and the employer-shared responsibility mandate went into effect in 2015. Is there an ACA small employer mandate? It’s challenging for small business owners to understand how the ACA impacts them specifically.
As a small business owner, how do you know if you’re required to provide health insurance for your employees? What type of coverage is required? And perhaps just as importantly, how do you collect the data to show the government you’re in compliance?
This guide will help you answer these questions and give you tips for staying in compliance. The good news is that there are clear guidelines on what’s needed. Here’s what you need to know.
When Does the ACA Employer Mandate Apply to You?
The Employer Mandate generally applies only to companies that have 50 or more full-time equivalent (FTE) employees. An FTE is 30 hours or more per week. To determine your FTEs, start by counting your full-time staff. Then, add up your total part-time hours and divide by 30. Add the two totals together for your FTE count.
Is There an ACA Small Employer Mandate?
If your company is under 50 FTEs, health insurance is not required by the ACA. However, if you do offer coverage, it must meet the minimum essential coverage outlined in the law. If you want to cover 50 or fewer FTEs, you have the option to use the SHOP Marketplace to find affordable coverage.
If you have 50 or more FTEs, you are considered an Applicable Large Employer (ALE) and you are required to offer health insurance to your employees.
What Health Insurance Coverage Is Required of ALEs?
If you have over 50 FTEs, what are you required to do? You must offer affordable health insurance to your full-time employees, and this insurance must provide a minimum value to your staff. The minimum value is that the plan must cover at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan.
If you don’t provide the appropriate level of coverage, you have to pay an employer-shared responsibility payment to the IRS as a penalty.
You also have to fulfill annual reporting responsibilities. According to the ACA, these requirements include:
- Withholding and reporting an additional 0.9% on wages or compensation over $200,000
- Reporting the value of health insurance coverage on a W-2
- Filing an annual return, aka Form 1094-C, reporting whether or not you offered insurance and what coverage was offered
- In addition, you must provide specific information if you choose to provide self-insured health coverage
Staying compliant can be a challenge, and there are serious financial penalties if you don’t. To make sure you keep everything in order, use a high-quality ACA reporting software. These solutions are consistently updated to keep up with legal changes and customer feedback and work with any ERP or payroll system.
With the right software, you can also continuously monitor your staff and receive monthly notices if someone is eligible for health insurance based on their working hours. It gives you the peace of mind you need to focus on your business’ larger goals.
Do Small Businesses Have Reporting Requirements?
While there isn’t a specific ACA small business mandate, if you have fewer than 50 FTEs you may still have reporting requirements under the ACA if you do decide to offer health insurance.
Why would you offer coverage? For many small businesses, having health insurance available is an important part of how they attract and retain top talent. It’s hard to compete with larger employers as it is, but offering great benefits makes a big difference.
You may also be eligible for the Small Business Health Care Tax Credit if you cover at least 50% of the premium cost your full-time employees have and you have fewer than 25 FTEs.
Here are other requirements that apply to you:
- You must withhold and report an additional 0.9% on wages or compensation over $200,000
- You may have to report the value of health insurance coverage on each W-2
- If you provide self-insured health coverage for full-time staff, you must file an annual return reporting specific information
As you can see, there are fewer requirements if your business doesn’t have 50 FTEs. However, that doesn’t mean that you shouldn’t understand the law and be aware of the requirements for larger companies. Your business may grow over time, and you may cross that threshold in the future.
Stay Compliant With the ACA
Offering health insurance is good business for most companies. It helps you get high-quality employees and keep the staff you rely on every day. If you have more than 50 FTEs, it’s also legally required.
Understanding your reporting requirements and staying up to date is essential. Having the right software can make it a lot easier. Focus on your business and let us take care of your ACA reporting. Contact Integrity Data today. aca small employer mandate, aca small business mandate, aca small business, aca employer mandate,