Understanding ACA for Employers and Businesses
Affordable Care Act Summary
Before we get started on understanding the Affordable Care Act (ACA) and how it affects your employer or business, let’s take a step back and get familiar with what the ACA entails. The ACA is a comprehensive health care reform law that was enacted in early 2010 and was created with three goals in mind; 1) To make affordable health insurance available to more people; 2) To expand the Medicaid program, and; 3) To innovate ways to lower the costs of health care in general.
With this law in place, the way health care works for employers and businesses changed. We’re here to help explain ACA for businesses both small and large and what you need to do to protect yourself and help your employees.
ACA and Large Businesses
The ACA changed the way employers buy and offer insurance to their employees. Under the ACA, larger companies (50 or more full-time employees) are required to offer affordable health insurance to their employees.
The ACA also states that companies are required to:
- Inform employees of their health insurance options, including coverage through the ACA Health Insurance Marketplace.
- Pay penalties if they do not offer health insurance coverage and fall under the definition of large employer.
- Pay penalties if they offer unaffordable coverage or coverage that does not cover at least 60 percent of all costs and the employee.
- Automatically enroll all employees in health insurance plans if they have more than 200 full-time (FT) employees.
ACA and Small Businesses
With all the rules and regulations in place for large companies (50 or more FT employees), you might be wondering what the ACA means for a small business. Small businesses have more flexibility and while the mandate might not even apply to your business, there are some rules under the ACA that all employers should be aware of.
Those rules include:
- All businesses (small and large) are required to report certain information about employees to the IRS, regardless of whether they’re offering insurance.
- If the business offers level-funded or self-funded coverage, 1094/1095 “B” reporting is required.
- There is a 90-day waiting period in which the employer can offer an employee health insurance. If insurance is offered to one FT employee, it generally must be offered to every employee within 90 days of his or her date of hire.
- Information about the plans being offered must be given to employees, which is called the “Summary of Benefits and Coverage.”