A Glance at Current ACA Requirements by the Federal Government
Let's face it - there's nothing simple that comes out of a government document. The Affordable Care Act, passed by the federal government in 2010, made certain requirements of businesses with regards to providing their employees with health insurance. But what exactly are the ACA requirements for business and how do you make sure you're in compliance? Here's a quick glance at some of the broad strokes to help get you started.
Coverage within 90 days of hiring. If you're going to offer health insurance to employees, it has to be offered within 90 days of hiring. That doesn't mean you have to offer health insurance on day one, just that it must be done by day 90.
What's considered full-time? The IRS considers full-time employment to be 30 hours or more per week on average. These employees should receive healthcare coverage from your business.
What's Full-Time Equivalent (FTE)? A full-time equivalent determines what programs you're eligible for and whether you can use an exchange. You'll take the total number of non-family employees and those who work over 120 days per year, add up their average annual hours, then divide by 12 to get monthly hours.
Small Business Tax Credit for under 25 FTEs. If you have less than 25 FTEs, you can receive a small business tax credit to help you cover the cost of required health insurance.
Exchange for under 50 FTEs. If you have under 50 FTEs, you're eligible to use the federal exchange to find insurance for your employees using the SHOP program.
You don't have to pay for all of it. You need to cover 60% of the cost of the insurance premiums, and the employees' portion cannot exceed 9.5% of their income.
Minimum healthcare coverage must be included. Your employees' healthcare plan must meet certain minimum to be considered acceptable under federal law, which can be found on healthcare.gov.
By having a better grasp of ACA business requirements, you can keep your small business in compliance with federal government regulations. But what if you're still not sure of exactly what your responsibilities are? The business professionals at AccountRely are ready to help. Please feel free to reach out today so that we can connect you with the right business consultant for your company's needs.
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