When Does an Employer Have to Offer Health Insurance?

A lot of changes in health insurance were made when the Affordable Care Act went into effect in March of 2020. One of the major changes was a mandate that certain employers had to offer their employees health insurance coverage, otherwise they could face stiff penalties.

If your company fits within certain limits, you will be subject to the mandates in the ACA. If your company does not, you don’t have to offer health insurance to your employees, but the ACA does offer a program for you to make it more affordable.

Below, we’ll look at what the requirements are for when an employer has to offer health insurance, as well as what options are available for small businesses.

Applicable Large Employers

The ACA mandates that any company that has at least 50 full-time equivalent employees, or FTEs, just offer affordable health insurance plans that meet MECs, or minimum essential coverage limits. Companies that fit into this category are labeled applicable large employers, or ALEs.

If these employers do not offer health insurance that fits within the MECs, then they will be subject to no-coverage penalties as outlined in the ACA. The law defines an FTE as anyone who works a minimum of 30 hours per week or 130 hours per month. So, in other words, if you have at least 50 such employees at your company, you qualify as an ALE.

This is calculated based on the average number of workers you employed the previous year, and there is an exemption for seasonal workers. Your status as an ALE can change from year to year, too, meaning you might be required to offer health insurance one year but not the next.

Options for Small Businesses

Any business that has less than 50 FTEs is not required to provide health insurance to their employees. However, not doing so in today’s employment market is usually a bad idea. Employees desire health insurance and consider it an important factor of where they want to work.

Part of the goal of the ACA was to make it easier and more affordable for small businesses to offer their employees health insurance. This is done through what’s known as the Small Business Health Options Program, or SHOP.

Some employers are able to enroll in this program through either a registered broker or agent, or directly through a private health insurance company. By doing so, the company can qualify for the Small Business Health Care Tax Credit that’s available, which helps to lower the costs of premiums. This is a great way to incentivize small businesses to offer their employees health insurance.

How Else Are Small Businesses Impacted by ACA?

In addition to not being required to offer health insurance, and having the availability of signing up for SHOP, small businesses are affected by the ACA in a few different ways.

One is that all employers who offer health plans to their workers have to offer it to every employee who is eligible as soon as they become eligible. There can be a maximum waiting period of 90 days for new employees.

Employers can also make available Flexible Spending Accounts, or FSAs, which help employees save for out-of-pocket medical expenses on a tax-free basis. Employers can even contribute to these accounts as a way to recruit new employees and incentivize their current ones.

Companies can also potentially qualify for rewards and incentives if they offer their employees wellness programs as well as other programs that would support a healthier workplace.

There are also disclosure rules when it comes to providing all employees with a standard SBC form, or Summary of Benefits and Coverage. This explains in detail what the health insurance plan covers as well as its cost.

Finally, some employers will be required to provide information about the Healthcare Marketplace to employees, even if they don’t offer a health insurance plan at all.

Have Questions? Work with Beckham Insurance Group

The Affordable Care Act can be complicated to understand at times, and not just whether you’re required to offer your employees health insurance or not. There are specific reporting requirements, incentives and rules that you need to know to ensure you stay compliant.

If your business is based in the South Carolina or Georgia area, work with Beckham Insurance Group to ensure that you’re doing all you’re required to do under the ACA. Our team of experienced professionals is well-versed on all things ACA, including different ways you can offer great health plans for an affordable cost.