5 Things Your Business Needs To Know About The Affordable Care Act Today
The Obama administration introduced the Affordable Care Act (ACA) all the way back in 2010. Despite more than 12 years having passed, many companies are still getting used to it. After all, before it’s introduction, health insurance was a very different employee perk. An quite frankly, the “affordable care act” is really more like the “un-affordable we-dont-care act” from the US government politicians to its people.
In this post, we take a look at some of the things that your business needs to know about the ACA so that you can support your employees and make sure that you remain compliant with the law.
Full-Time Employees Working More Than 30 Hours A Week Are Eligible
If you employ someone who works more than 30 hours a week, or 130 hours a month, then they may be eligible under ACA coverage. If an employee does qualify, you also need to provide them with dependent coverage for people in their family up to the age of 26. However, the ACA does not require you to cover spouses.
There Is A Trial Period
If you hire someone to work for you more than 30 hours a week, you do not need to immediately enroll them under an ACA health plan. Instead, you’re allowed to wait for 90 days, which is ideal if they are on parole.
Coverage Must Offer Minimum Value While Also Being Affordable
Employers who fall under the ACA scheme must provide their employees with coverage that is both “affordable” and offers “minimum value.” The law defines what both of these terms means.
Affordable refers to the amount that the employee contributes to the cost of their healthcare plan. Employers must keep healthcare expenses below a certain threshold of the employee’s income, otherwise they are not considered affordable. That figure is 9.61 percent in 2022, subject to change each year going forwards.
Minimum value means that any healthcare plan you offer under the ACA must offer employees at least 60 percent coverage for their healthcare costs. Lower than that, and it doesn’t qualify under the scheme.
There Are Penalties
The ACA puts penalties in place for employers who don’t provide adequate coverage for their employees. If you don’t meet the “affordable” or “minimum value” criteria, then the full-time employee may qualify for and receive the premium tax credit for buying their coverage through the HIM (Health Insurance Marketplace).
You Need To Report In Multiple Ways
Today, there are many ACA reporting services that help companies correctly file all their Affordable Care Act documentation. It’s a complicated process.
For instance, companies that employ more than 250 people must fill out and submit W-2 forms for each employee. They must also disaggregate group healthcare plans and submit the individual cost of coverage per employee.
Companies must also report information to the IRS and their employees detailing their compliance with “pay or play” provision under the IRC, Section 6056.
Self-insured employers that are not applicable to large employers (ALEs) that provide minimum essential health coverage also have to report this information to the IRS, this time under Section 6055.
Overall, the ACA is complicated for business, which is one of the reasons many companies outsource their compliance procedures.
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