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Summary of the Affordable Care Act for businesses

 
Before we begin...  Requirements for the Affordable Care Act depend on the number of full time employees a business has. So, here are some definitions and basic facts:
  • A full time employee is anyone who works 30+ hours/week. There are some exceptions for seasonal workers.
  • All the hours of part-time workers are added and divided by 30 hours/week, and the result is added to the number of full time employees that you have.
  • If you own multiple businesses and try to keep the number of employees for each one under 50, the IRS will determine fines by combining your businesses.
  • Unlike individual plans, businesses can sign up to provide group health insurance ANY TIME.
  • The costs can be shared with employees as long as it is affordable. "Affordable" means the insurance cost for the worker (not including dependents) cannot exceed 9.5% of the worker's income.

Businesses cannot avoid the whole thing by reimbursing employees for health insurance that employees purchase individually - and if they do, they may be fined for doing it. Businesses with fewer than 50 employees CAN increase employee taxable wages and let individual workers decide whether to use the funds for health insurance.

Businesses cannot reclassify workers as independent contractors to avoid paying health insurance. To be a true independent contractor, the relationship between the worker and the hiring firm must comply with IRS rules, or the hiring firm faces stiff penalties.

The requirement for businesses with 50 to 100 employees to offer health insurance was delayed until 2016, but the paperwork requirement was not. All businesses with 50 or more employees must provide IRS 1095-C to their employees and the IRS for 2015 (due 1/31/2016).
 
Businesses with
25 or fewer employees
 
  • Are NOT required to provide health insurance to their employees.
  • Can shop for group health plans through SHOP: Small Business Health Options Program
  • Can receive tax credits when providing health insurance to your workers for the next two years IF they earn less than $50,000 per year. Here is the calculator.
  • If you provide group health insurance, you must report it on each employee's W-2 in box 12 using code DD. The amount should be the total paid (employer and employee) for that employe. It is NOT taxable.
 
Businesses with
26 to 50 employees
 
  • Are NOT required to provide health insurance to their employees
  • Can shop for group health plans through SHOP: Small Business Health Options Program
  • If you provide group health insurance, you must report it on each employee's W-12 in box 12 using code DD. The amount should be the total paid (employer and employee) for that employe. It is NOT taxable.
 
Businesses with
50-100 employees
 Must offer affordable health care to their full time employees. This requirement was delayed and does not begin until 2016.
  • Employees do not have to accept the coverage.
  • Businesses do not have to cover dependents or a spouse.
  • Businesses must provide IRS 1095-C to full-time employees and to the IRS each year, showing the coverage that has been offered. This paperwork requirement was NOT delayed, so you have to do it for 2015 (due 1/31/2016).
  • Businesses cannot use the SHOP program, but must obtain coverage through a broker or self-insure.
 
Businesses with
100+ employees
  Must offer affordable health care to their full time employees.
  • Employees do not have to accept the coverage.
  • Businesses do not have to cover dependents or a spouse.
  • Businesses must provide IRS 1095-C to full-time employees and to the IRS each year, showing the coverage that has been offered (due 1/31/2016).
  • Businesses cannot use the SHOP program, but must obtain coverage through a broker or self-insure.
 
Questions? Employers: 800-706-7893 M-F only. Individuals (including self-employed): 800-318-2596