What is the Affordable Care Act (ACA) for Employers?

By hrlineup | 17.12.2019

There is a major milestone that the Obama administration achieved, and that was the reforms made to the Affordable Care Act (ACA). The intention of the act was to broaden the accessibility that employees have to health care, particularly those employees that work with large companies. Overall, it offers affordable health insurance to serve the greater population. It was also intended to aid in the expansion of the Medicaid program.

Medicaid is the governments free health insurance plan that is meant to cater to the poor. This is possible by offering subsidies to adults whose income levels fall below 128% of the federal poverty level. With Medicaid, more people would be able to buy health insurance. With it, 10 million more Americans were able to access health insurance. There are only 16 state-based marketplace states that have adopted the Medicaid expansion, while 17 federally facilitated states have adopted the Medicaid expansion. 

A Look at the Past

Looking at the history of the affordable care act explains considerably what is happening with it today., It was enacted in two parts. The first was the Patient Protection and Affordable Care Act which was signed into law on 23rd March 2010 and was then amended by the Heath Care and Education Reconciliation Act on 30th March 2010. It is quite possibly one of the most controversial acts that has been passed.

What Employers Need to Know

Depending on the size of the company, the employers abide by different rules when it comes to the Affordable Care Act. The ACA requirements for large employers tend to be more stringent than those for companies that are smaller, which have less employers. Here are what the companies need to know: –

  • The company or employers needs to offer health insurance coverage of at least 95% of its full-time employees. This also includes their dependent children.
  • The employer also needs to pay for at least 60% of the covered health care expenses.
  • The employees should not have to pay in excess of 9.56% of their household income for the employer coverage.

If these ACA requirements for employers with more than 50 employees are met, then their employer will not have to face any penalties for non-compliance. However, if there are any that are not met, then the company will be forced to face some penalties.

Should the employer not be offering coverage, then the penalty for every month that the employer continues to fail is $2,320 divided by 12 times the number of full time employees (minus up to 30).

If the insurance offered by the employer is not affordable, then the penalty for each month is $3,480 divided by 12 for each full-time employee that is getting a premium tax credit that month.

Employer responsibility comes to the fore with this act, as there are more benefits for ensuring that the employer does offer health care benefits, then them not offering these benefits.

Small Companies Requirements

Companies that have less than 50 full time equivalent employees may be eligible for a health insurance tax credit so that they are able to purchase coverage. This is applicable particularly if the employer has less than 25 employees working full time who have average annual wages of approximately $50,000 or less, and if they are covering at least 50% of full time employees premium costs.

The Affordable Care Act and employers are an excellent way for all Americans to gain access to excellent health care. The first step to knowing how to use it, is to read it in detail to understand what it contains. It can be downloaded as a PDF version from healthcare.gov, and there is also additional helpful information on the site that can help answer common questions. For employers to be able to understand how the act works, and to ensure that all their employees have access, then payroll service providers should be consulted. Other vendors and helpful resources that one can interact with are the Benefit Brokers.

This is one act that is bound to continue evolving. It is essential for employers to consistently check for updates to this act, as there could be greater benefits to be experienced over time, and in different states.

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