If you are a business owner who has more than 50 permanent employees, then the ACA- Affordable Care Act mandates that you provide health insurance to all of them. While you are complying with the ACA, you may find the process to be a straightforward one. However, the ACA lays down the employer mandate and has a complete set of regulations to secure the employees.
The ACA is a holistic health care reform enacted in March 2010 by then-president Barack Obama. It also has targeted primary goals that work towards ensuring a better life for all covered. We shall be covering the goals of the ACA shortly into the article.
While there is an extensive amount of information available, there could be floating questions around ACA. This post aims to answer all the queries and doubts regarding ACA. Here is what we shall be exploring:
- What is ACA?
- Primary Goals of the ACA
- Does the employer mandate apply to you?
- What type of health insurance do you need to provide?
- What happens if you don’t provide coverage to the employees?
- How can Deskera Help You?
- Key Takeaways
What is ACA?
ACA or the Affordable Care Act was introduced to ensure that people could receive basic or affordable medical care. It directs the employers to make health care and health insurance accessible to all their employees.
The Act specially prescribes the employer mandate, which implies that it is the responsibility of an employer to make complete affordable health insurance available to their employees if they have a minimum of 50 or more full-time employees working for them.
What happens if the employers do not comply?
It is the duty of the business owners or the employers to offer full health insurance; a failure in doing invites a penalty from the IRS. The employers, in this case, must pay the fine, which is also called shared responsibility payment.
Primary Goals of the ACA
The ACA act, also known as Obama Care, has three primary goals. which are as follows:
- More people should have access to affordable health insurance
- All adults with incomes below 133% of the federal poverty level should be eligible for Medicaid. This has been implemented only in some of the states
- Encourage innovative medical care delivery methods that will reduce health care costs
Under the ACA, all health plans offered on the exchanges must cover the 10 essential health benefits as well as children's dental coverage.
The ACA requires that all plans cover ten essential health benefits. Among them are:
- Emergency services
- Services pertaining to mental health and substance use disorders
- Pregnancy, maternity, and newborn services (which includes prenatal, labor, and delivery, and postnatal services)
- Devices and services in rehabilitative and habilitative care (this helps people with injury or chronic illness to regain skills)
- Laboratory services
- Hospitalization (surgeries and inpatient care)
- Outpatient care
- Prescription drugs
- Pediatric services (including dental and vision care)
- Preventive care, wellness services, and chronic disease management
There can be minor differences in coverage between and within states within each category.
Does the employer mandate apply to you?
The first step is to determine how many full-time equivalent (FTE) employees your company has.
Who is a full-time employee?
Full-time employees are the workers who work at least 30 hours a week or 130 hours a month for 120 days or more in a year. Those who work less than that are considered part-timers.
You can figure out how many FTEs you have by using the formula below:
Here are some significant steps you can follow if you need them:
- Calculate the number of hours that each of your part-time workers works in a week
- Take that number and divide it by 30
- Take the result and round it down to the nearest whole
- This number is to be added to the number of full-time employees you have
Now that you have this number, it would be easier for you to decide the future course of action and determine which plans you can offer.
What type of Health Insurance do you need to provide?
You must provide insurance to your employees and their dependents if you have 50 or more full-time equivalents. Here are the two minimum requirements that the plan must fulfill:
- You must ensure that the plan is affordable. The cheapest single-person plan should not have a premium greater than 9.78% of the total household income of the employee. A policy's affordability can be determined by looking at the employee's Form W-2 wages, their salary, or the federal poverty line
- It must deliver minimum value. At least 60% of the expected total cost of services can be covered by an insurance plan that provides minimum value. You can find a calculator that calculates minimum value here
What happens if you don’t provide coverage to the employees?
There are certain situations in which the employer faces a penalty or a fine. If your is a large business, then you must offer health insurance to at least 95% of your employees. Not doing so will attract fines.
So, here are the scenarios in which you may have to pay the penalty:
- Being a large business, you do not offer health insurance to at least 95% of your employees
- If the plan you offered is not affordable
- If the plan you offered does not provide a minimum value
- If an employee purchases health insurance on their own and also receives a subsidy
How can Deskera Help You?
Deskera People allows you to conveniently manage leave, attendance, payroll, and other expenses. Generating pay slips for your employees is now easy as the platform also digitizes and automates HR processes.
Key Takeaways
The important points learned are:
- If you are a business owner who has more than 50 permanent employees, then the ACA- Affordable Care Act mandates that you provide health insurance to all of them
- The ACA is a holistic health care reform enacted in March 2010 by then-president Barack Obama.
- ACA or the Affordable Care Act was introduced to ensure that people could receive basic or affordable medical care. It directs the employers to make health care and health insurance accessible to all their employees
- The Act specially prescribes the employer mandate, which implies that it is the responsibility of an employer to make complete affordable health insurance available to their employees if they have a minimum of 50 or more full-time employees working for them
- It is the duty of the business owners or the employers to offer full health insurance; a failure in doing invites a penalty from the IRS
- The primary goals of the ACA are ensuring access to affordable health care services to more people, expanding the Medicaid program, reducing the costs of medical care through innovation
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