While the majority of provisions under the Affordable Care Act (ACA) apply to applicable large employers (ALEs), there are requirements, as well as benefits, that apply to small employers, those with fewer than 50 full-time employees, including full-time equivalents (FTEs).
READ MORE: What You Need to Know about ACA
Requirements. In order to offer a SHOP health plan, the small businesses must meet the following criteria:
Some states have different participation requirements, so it’s important to check with the program in your state.
By offering a SHOP plan to employees, eligible employers can offset a portion of premium costs through the Small Business Healthcare Tax Credit.
Requirements: To qualify, a small business must:
For certain businesses, this tax advantage can mean significant savings in health plan premiums. Here’s an example of how it works. A small employer, with 10 employees, pays a total of $250,000 a year in wages (or $25,000 per employee) and contributes a total of $70,000 toward health plan premiums, would qualify for a tax credit of $35,000 (50 percent of the employer's contribution).
Under the health care law, small businesses can receive a reward for providing an employee wellness program and activities that support a healthier workplace.
Small employers are not subject to the requirements under the employer shared responsibility provisions, but do have reporting obligations as a provider of minimum essential coverage through a self-insured health plan.
Filing requirements for the 2019 tax year include:
Is your small business considered an ALE? Reporting rules depend on the size of your workforce during the prior year, so it’s important to understand how to calculate your total number of full-time employees, including full-time equivalents.
READ MORE: Complying with ACA in 2020
Access to affordable and comprehensive health plans tops the list as one of the most important benefits for employees. But due to costs, compliance risks, and complex reporting requirements, health insurance in an ongoing challenge for small employers to provide.
An IRS-certified PEO, like Propel HR, can help. From time-consuming administrative HR tasks, identifying health plans, our team of HR experts can help you stay in compliance with the changing rules of ACA that can affect your small business.
PLEASE NOTE: This information is for general reference purposes only. Because laws and regulations are constantly changing, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits advisor regarding your responsibilities. In addition, your company or health plan may be exempt from certain requirements and/or be subject to different requirements under the laws of your state.
An IRS-certified PEO, Propel HR has been a leading provider of human resources and payroll solutions for more than 20 years. Propel partners with small to mid-sized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs.