What is the Affordable Care Act (“ACA”)?
Signed into law in 2010, the ACA (actually entitled the Patient Protection & Affordable Care Act) required every US citizen to have health insurance or pay a tax penalty. (Note: In December 2017, President Trump signed the Tax Cuts and Jobs Act, which repeals the ACA tax penalty effective 2019). The three primary goals of the ACA include:
Employers and the ACA
Small Employers. Employers with less than 50 full-time employees do not face penalties for declining to offer healthcare coverage. These employers can, however, still purchase coverage for their employees through the Small Business Health Options Program (“SHOP”).
Employers with less than 25 full-time employees may be eligible for a health insurance tax credit IF:
Large Employers. Employers with 50 or more full-time employees during the preceding calendar year are considered applicable large employers (“ALEs”). To avoid penalty, ALEs must:
According to the IRS, an ALE may be subject to a penalty IF:
It is important to note that even if an ALE provides minimum essential coverage to at least 95 percent of its full-time employees, the ALE may still be required to pay a penalty for each employee who receives the premium tax credit.
For All Employers. Regardless of size, any employer who provides self-insured health coverage must file an annual return for each individual they cover. This return must report what health insurance(s) the employer offered its employees.
For more information, contact York Bowman Law, LLC.