Three Ways the ACA Has Affected Small Business

  Since it became law in 2010, the Affordable Care Act (ACA) has significantly affected employers, employees, and families across America. Because most U.S. employers have fewer than 500 employees, the ACA’s largest impact has been on smaller firms. Below are three of the ACA’s provisions affecting smaller businesses:

1. Employer Mandate: The ACA Employer Mandate requires businesses with 50 or more full-time equivalent employees to provide health insurance to at least 95 percent of full-time employees and dependents up to age 26 or pay a fee. An employer owes a penalty if coverage is not offered, is not affordable, or does not meet minimum value standards.
2. Full-Time Equivalent Calculation: For some employers, calculating the number of employees is easy. However, for businesses that employ part-time or seasonal workers, the calculation is a bit harder. For purposes of the ACA, a full-time employee is one who averages 30 hours per week (130 hours per month). To calculate full-time equivalent (FTE) employees, employers must add the number of hours worked by part-time employees in a given month and divide the total by 120. That number is then added to the full-time employee number to determine whether the business is a 50+ employee group as it relates to the ACA.
3. Affordability Test: A health plan is considered “affordable” under the ACA if it costs no more than 9.5 percent of an employee’s household income for employee-only coverage. As a safe harbor, since household income may not be readily available to an employer, a business can make sure the plan costs no more than 9.5 percent of employee-only income.

Contact a CaliforniaChoice broker  to find out about other ways the ACA may affect your business and health insurance coverage for your employees.