Affordable Care Act Reduction of Hours Allowing Continued Coverage
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: 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.
Although the Affordable Care Act employer requirements only apply to employers with 50 or more employees, small businesses with fewer than 50 employees are also encouraged to provide health care coverage for their employees.
Small business employers can meet all or some of the Affordable Care Act requirements for employers as they see fit. Some examples of what small businesses can provide their employees include flexible spending accounts, workplace wellness programs, and ICHRA plans, which reimburse employees for their healthcare spending.
Small businesses who choose to provide coverage to their employees are not subject to the shared responsibility requirement, which means that small businesses have more flexibility in how much they cover for their employee health services.
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 ACA 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. But there still are some employer rules under the ACA that any employer should be aware of. Listed below are a few rules that might affect how you go about offering insurance to your employees.
- You are required to report 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 health insurance 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.
ACA Employer Mandate FAQs
How are employer shared responsibility payments calculated?
The payments that an employer must make to satisfy the minimum requirements are calculated per employee, depending on whether the employer offers minimum essential coverage. For employers not offering minimum essential coverage, the payments are $2,000 per year for each full-time employee, although the first 30 employees are not counted in this figure. For employers offering minimum essential coverage, the payments are $3,000 per year if at least one employee receives a health care subsidy.
What are the consequences of the ACA employer mandate?
If an employer with more than 50 full-time employees fails to provide the minimum affordable health care coverage, they may be subject to fines. If no health insurance coverage is provided, an employer will be charged $2,570 a year per employee, minus the first 30 employees. If coverage is provided, but does not meet the minimum 60% threshold to be considered affordable, the fee will be the lesser of $3,860 per employee receiving a subsidy or $2,570 per employee, minus the first 30 employees.
By meeting the Affordable Care Act employer requirements, employers with more than 50 full-time employees can expect to spend less on health coverage than they might spend on fines for not meeting the requirements.
What states require employers to report their ACA information?
Employers with more than 50 full-time employees are required to report information about their employee health coverage to the IRS. The states that require employers to report on their coverage include New Jersey, California, Massachusetts, Vermont, Rhode Island, and the District of Columbia, although additional states are also beginning to require reporting.
Can eHealth help your business with the ACA Employer Mandate?
When it comes to small business health insurance, eHealth is ready to help you meet the Affordable Care Act requirements for employers. Regardless of the size of your business, meeting the Affordable Care Act employer mandate will provide value to your business and your employees. Working with eHealth can ensure that the necessary requirements are met, helping you to avoid fines, while minimizing your cost and maximizing the benefit to your employees.
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.
Source: https://www.ehealthinsurance.com/resources/affordable-care-act/know-aca-rules-affordable-care-act-mandate
0 Response to "Affordable Care Act Reduction of Hours Allowing Continued Coverage"
Post a Comment