Learn about ACA rules for small business employers.
If you’re a small business owner with employees, knowing the Affordable Care Act (ACA) rules is important so you know where you stand with the law. Employer rules under the ACA may seem complicated, but knowing the ins and outs of the rules that apply to you could be seriously beneficial to your business. We’ll explore the Affordable Care Act Employer Mandate and help you understand how this affects you and your responsibility to your employees.
Affordable Care Act employer mandate: know the basics
The employer shared responsibility provision under the Affordable Care Act Employer Mandate became officially effective in 2015. Under this provision, certain applicable large employers (ALEs) are subject to employer shared responsibility provisions. This means ALEs must offer affordable health coverage to employees, and the insurance must provide “minimum value” to employees and their dependents. As an ALE, if you do not provide such benefits to your employees, then you might have to pay an employer shared responsibility payment to the IRS.
Affordable Care Act employer mandate: larger versus smaller companies
The Affordable Care Act employer mandate generally applies to employers with 50 or more full-time employees, according to the IRS. This means that in most cases, these businesses must offer health insurance to their employees, or make an employer shared responsibility payment to the IRS.
For many small businesses (fewer than 50 full-time employees), health insurance is not a requirement under the ACA. However, if you do choose to offer health care to your small business employees, the plan must meet the standards of minimum essential coverage outlined by the Affordable Care Act.
The Affordable Care Act employer mandate and small businesses
As a small business owner, in some sense you have more flexibility than companies deemed “large businesses” with 50 or more full-time employees. The Affordable Care Act employer mandate might not even apply to you if have fewer than 50 employees. But there still are some employer rules under the ACA that any employer should know about. Listed below are a few rules that might affect how you go about offering insurance to your employees.
- You are required to report to certain information about employees to the IRS, regardless of whether or not you’re offering insurance.
- You generally have a 90-day waiting period in which you can offer an employee health insurance. If you offer insurance to one full-time employee, it generally must be offered to every employee within 90 days of his or her date of hire.
- You must give employees information about the plans being offered, which is called the “Summary of Benefits and Coverage.”
To read more about how small businesses are affected by employer rules under the ACA, read this article.
More details on the Affordable Care Act employer mandate and providing insurance
- If dependents are included on an employee’s group plan, then the adult dependents must be allowed on the plan through the age of 26.
- When calculating how many full-time employees you have, you should also include full-time equivalent employees, according to the IRS. So a few part-time employees might add up to one full-time employee.
- Employees who have coverage under TRICARE or Veteran’s Administration do not count towards your tally of employees for ACA purposes.
- The Department of Labor defines seasonal workers as those who only work on a seasonal basis, and retail workers work only during holiday seasons. Whether they count towards your tally of employees will depend on how long they worked and how many hours.
This article about the Affordable Care Act Employer Mandate is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.