Healthcare reform

The Affordable Care Act (ACA), passed in 2010, requires most Americans to buy health insurance. Find out what that means for you and your company.

ACA business sizes

The ACA defines business sizes based on full-time employees.

  • A large business has an average of at least 100 full-time employees.
  • Mid-sized companies have 50-99 full-time employees and equivalents.
  • Small businesses have fewer than 50 full-time employees and aren’t required to offer their employees health insurance coverage.

Shared responsibility

The ACA helps ensure that the U.S. healthcare system shares responsibility for medical costs and payments. Everyone — from the government to individuals to doctors — plays a role in making this framework possible.

Businesses must assume shared responsibility within the following guidelines.

Employers:

  • Are required to provide notice to new employees of their health insurance options within the first 90 days of employment, including coverage through Marketplaces and a description of how the employee may contact them for assistance.
  • With 100 or more full-time employees that don’t offer health insurance coverage must pay $2,000 for every full-time employee (not including the first 30 employees) who obtains premium tax credits for purchasing health coverage insurance through a Marketplace
  • That offer unaffordable coverage or coverage that doesn’t cover at least 60 percent of costs will pay $3,000 for any employee that receives a tax credit in a Marketplace and up to $2,000 for every full-time employee
  • With 50-99 full-time employees and equivalents that don’t offer health insurance coverage will have to pay $2,000 for every full-time employee (not including the first 30 employees) who obtains premium tax credits for purchasing health coverage insurance through a Marketplace
  • That offer unaffordable coverage or coverage that doesn’t cover at least 60 percent of costs will pay $3,000 for any employee that receives a tax credit in a Marketplace and up to $2,000 for every full-time employee

Penalties

If a business employs:

  • Fewer than 50 full-time employees or equivalents, penalties do not apply
  • 100 or more full-time employees or equivalents, penalties will vary according to various healthcare regulations
  • 50-99 full-time employees or equivalents, penalties will vary according to various health care regulations.

View a flow chart explaining the penalty process.

Benefits of self-funding

Since the ACA implemented, there are some perks for businesses who chose to self-fund:

  • Avoid state mandates: Self-insured plans are exempt from state insurance laws, like the ones implemented by the Affordable Care Act.
  • Tax exemption: A self-funded health plan is tax exempt from most state premium taxes, which is an estimated savings of two to three percent of the premium dollar value.

Related information

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