Post-ACA Employer Responsibility Rules: The Madness Made Simple

September 2, 2015


Since January 1 of this year, employers with 50 or more full-time equivalent employees (FTEs) must follow new rules about how they provide health insurance to employees. If employers don’t offer affordable coverage that provides a minimum level of coverage to 95% of their full-time employees and their dependents up to age 26, they may be subject to something called an “Employer Shared Responsibility payment.” These requirements are sometimes referred to as the “Pay or Play rules.”

Side notes:

  • An employee is considered “full-time” if they work an average of at least 30 hours a week
  • An employer that meets the 50 FTE threshold (50 full-time employees or a combination of full-time and part-time employees equivalent to 50 full-time employees) is considered an “applicable large employer” – including all for-profit, non-profit, and government entity employers

What about smaller (and even larger) businesses?

While the above rules are currently in effect for businesses considered large employers, employers with 49 or fewer FTEs still have to meet certain requirements. Also, there are some different requirements that only apply to employers with 100 or more FTEs. Here’s a breakdown of the post-ACA health insurance responsibilities of different sized employers:

Fewer Than 50 FTEs

Small businesses with 49 or fewer FTEs aren’t required to offer traditional health insurance, and the ACA’s Employer Mandate doesn’t apply to them. These employers can send employees to the individual market to purchase plans on their own, or they can partner with a company like Gravie—giving employees access to unbiased experts that can help employees sort through all of their options.

If an employer wants to offer group coverage, some can qualify for a general business credit on their income tax return using Form 8941. This credit helps some small businesses cover a portion of their share of employee premiums. Eligible employers must offer employees insurance through the Small Business Health Options Program, known as the SHOP Marketplace.

50-99 FTEs

With some exceptions, large employers with 50-99 FTEs were required to provide affordable, minimum essential coverage to 95% of their full-time workers starting on January 1, 2015. Ultimately, employers of this size will have to follow the same rules as companies with 100+ FTEs. The annual penalty for employer if they fail to offer appropriate coverage is $2,084 times the number of full-time employees, not counting the first 30 full-time employees. The penalty amount will increase for 2016 and beyond.

100 or More FTEs

In 2015, companies with 100 or more FTEs need to provide minimum essential coverage to at least 70% of their full-time employees (in 2016 the requirement will be at least 95%). The annual penalty for employers if they fail to offer appropriate coverage is $2,084 times the number of full-time employees, not counting the first 80 full-time employees (in 2015; not counting the first 30 in 2016). The penalty amount will increase in 2016 and beyond.

If employers provide coverage but it isn’t affordable or doesn’t meet the minimum coverage requirements, the annual penalty is $3,126 for each FTE receiving a government tax credit. The total penalty amount can’t exceed the amount in the previous equation. The penalty amount will increase in 2016.

What Should You Do?

Wondering what your company can do to meet these requirements? You came to the right place. At Gravie, we’ll help your employees find and manage the right plan for them while also making sure you as the employer meet all ACA requirements whether you have 3 or 2,000 FTEs.

To find out how Gravie can help you save money, offer employees better health insurance options, and comply with ACA requirements, fill out our online contact form and we’ll get back to you within 24 hours.

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