ACA Insurance Requirements For Employers

ACA Insurance Requirements For Employers: An In-depth Guide

The Affordable Care Act (ACA) is a comprehensive healthcare reform law that was passed in 2010. One of the main provisions of the ACA is the mandate that requires employers to provide health insurance coverage to their employees. This mandate is also known as the Employer Shared Responsibility Provision or the Employer Mandate. In this article, we will explore the ACA insurance requirements for employers in detail.

What is the Employer Mandate?

The Employer Mandate requires employers with 50 or more full-time employees or full-time equivalents (FTEs) to offer health insurance coverage to their employees. A full-time employee is defined as someone who works at least 30 hours per week or 130 hours per month. FTEs are calculated by combining the hours worked by part-time employees. For example, two part-time employees who work a combined total of 60 hours per week would be counted as one FTE.

Employers who fail to comply with the Employer Mandate may face penalties. The penalty amount varies depending on the size of the employer and the number of employees who are not covered. The penalty is also calculated based on the number of months that the employer is out of compliance.

What are the ACA Insurance Requirements for Employers?

Under the ACA, employers are required to offer minimum essential coverage (MEC) to their full-time employees. MEC is a type of health insurance that covers a range of essential health benefits, including:

– Ambulatory patient services
– Emergency services
– Hospitalization
– Maternity and newborn care
– Mental health and substance use disorder services
– Prescription drugs
– Rehabilitative and habilitative services and devices
– Laboratory services
– Preventive and wellness services and chronic disease management
– Pediatric services, including oral and vision care

Employers must also ensure that the health insurance they offer meets certain affordability and minimum value requirements. The affordability requirement states that the employee’s share of the premium for the lowest-cost plan should not exceed 9.5% of their household income. The minimum value requirement states that the plan must cover at least 60% of the total allowed cost of benefits.

How to Comply with ACA Insurance Requirements for Employers

To comply with the ACA insurance requirements for employers, employers must offer MEC that meets the affordability and minimum value requirements to their full-time employees. Employers must also provide a notice of coverage options to all employees at the time of hire and annually thereafter.

In addition, employers must track and report certain information to the IRS on a yearly basis. This information includes the names and Social Security numbers of all employees who were offered coverage, the months in which coverage was offered, and the cost of coverage.

Employers can use the IRS Form 1095-C to fulfill their reporting requirements. The deadline for filing Form 1095-C is typically February 28th (or March 31st if filed electronically) of the year following the calendar year in which coverage was offered.

Small Business Health Care Tax Credit

Employers with fewer than 25 full-time equivalent employees may be eligible for the Small Business Health Care Tax Credit. This tax credit is designed to help small businesses afford the cost of health insurance for their employees. To qualify for the tax credit, the employer must meet certain criteria, including:

– The employer must have fewer than 25 full-time equivalent employees
– The average annual wages of the employees must be less than $50,000
– The employer must contribute at least 50% of the premium costs for employee coverage

The tax credit amount is up to 50% of the employer’s contribution toward employee premiums (35% for tax-exempt employers) and is available for up to two consecutive years.

Conclusion

In conclusion, the ACA insurance requirements for employers mandate that employers with 50 or more full-time employees or FTEs must offer MEC that meets certain affordability and minimum value requirements. Employers must also provide a notice of coverage options to all employees, track and report certain information to the IRS, and may be eligible for the Small Business Health Care Tax Credit. Non-compliance with the Employer Mandate may result in penalties. It is important for employers to understand and comply with these requirements to avoid penalties and provide their employees with access to comprehensive health insurance coverage.