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It’s hard to believe we’re already talking about Affordable Care Act responsibilities again, but it’s better to start now than be left scrambling later. If you’re a first time business owner, just took over a franchise, or are simply curious about how the ACA might affect your business as you grow in size, this serves as a great refresher.
Two provisions of the ACA only apply to applicable large employers (ALEs): Employer shared responsibility and employer information reporting, the latter of which is typically completed using the Forms 1094/1095-C.
That generally depends on the average size of your workforce during the prior year. To determine your size, first count the total number of full-time employees for each month of the prior calendar year.
For ACA purposes, full-time employees are those who are working 30 hours per week or 130 hours per month. Then add together the total hours worked each month for all the part time employees (those who worked less than 130 hours in the month) in the organization and divide each monthly count by 120.
This second calculation will provide the fractional count of full-time equivalent (FTE) employees in the organization. Add the total full time employee count to the total FTE count for each month of the prior year and divide that number by 12 to obtain your average number of employees for the year. If the result is 50 or more employees, then you are an ALE. (This blog post breaks it down with full calculations here).
If you have fewer than 50 full-time employees (including full-time equivalents) during the prior year then you are not an ALE for the current calendar year. You are not subject to the employer shared responsibility provisions thus will not be subject to penalties for not offering medical coverage or for not offering affordable medical coverage. You are also not required to complete the Forms 1094/1095-C.
However, if you sponsor a self-insured health plan that provides minimum essential coverage, you still have certain reporting requirements. Find them here.
You may also be eligible for the Small Business Health Care Tax Credit. Learn about that by clicking here.
If you have at least 50 full-time employees (including full-time equivalents) on average during the prior year, then you are an ALE for the current calendar year. Therefore, you are subject to the employer shared responsibility provisions and the employer information reporting provisions.
To learn more about each provision and due dates for reporting requirements, click here.
OR reach out to us! PrimePay’s ACA Compliance Navigator will help keep your business compliant, no matter the size. Our team of experts will be able to answer any questions you might have and set your business up for success. Go to primepay.com/aca to learn more.