Whether you’re starting a new business or you’ve recently increased your workforce, it’s important to ensure you’re complying with the Affordable Care Act (ACA) when providing health care options to your employees. Understanding the basics can help you avoid unnecessary penalties later on down the road, too. Here are some practical ways to be ACA-compliant:
1. Consider the Size of Your Workforce
Reporting the right number of workers is essential since your workforce size can impact the reporting requirements that you must follow. Employers with 50 or more employees must provide health care coverage for employees. If you provide self-insured health coverage and have less than 50 employees, then you must file an annual return for the individual employees that your company covers. All employers providing health care coverage need to send a statement to the individuals who are responsible for the coverage. If your company qualifies as an applicable large employer (ALE), you must also include a statement to each full-time employee (FTE) and report if you’ve offered them health insurance. If you did, you must describe the insurance you offered.
2. Report With Accuracy
Whether you have 25 FTE workers or 99, small businesses that offer health care coverage for their employees still must report with accuracy. While the focus of compliance is often specific to ALEs, employers with less than 50 employees should still accurately report health coverage and track employees’ work status. This information becomes vital so that you can continue compliance even as your FTE workforce grows.
3. Don’t Go Over the Maximum Waiting Period
Employers that offer health care coverage must do so within 90 days of the beginning date of employees’ eligibility start date. For instance, if your part-time employee is eligible to qualify for the company health insurance based on becoming a full-time employee, the maximum time she is required to wait to receive these benefits should not go over a period of 90 days from her start date of becoming a full-time employee.
4. Offer Affordable and Essential Healthcare Coverage
The requirements to stay in compliance with ACA for ALEs include providing health care plans that offer minimum essential coverage. This means your plan should cover a minimum value to your employees and their dependents, which is 60 percent of the expected total allowed benefit costs. This coverage also needs to be affordable, which you can determine by using an employees wages as reported on his W-2 or the federal poverty guidelines. If you don’t meet these requirements, you can face tax penalties, including the employer shared responsibility payment. For example, you could potentially pay a tax penalty of $2,000 per FTE if the health care coverage you offer doesn’t meet minimum essential coverage.
5. Understand the Requirements
Small business employers can take advantage of tax incentives, but it’s important to understand the eligibility requirements. Your business must employ less than 25 FTEs to qualify for the small business health care tax credit. These FTEs’ annual wages must also average less than $50,000 per year. This amount is adjusted for inflation annually. For example, the average annual wages must be less than $53,000 for the 2017 tax year. Also, you must cover at least half of your employees’ premium expenses and buy their coverage from the Small Business Health Options Program (SHOP).
Health-contingent wellness programs, such as tobacco-cessation programs, can provide a savings of up to 30 to 50 percent for employees. But employers must follow specific rules to stay compliant under ACA, such as providing your employees with the chance to participate at least annually and designing a program that aims to achieve disease prevention and health promotion.
Complying with ACA rules calls for understanding the rules and knowing your options. By following these tips, you can ensure you keep in compliance with ACA rules.