Affordable Care Act Requirements
Employer Responsibility: What Businesses Need to Know

Affordable Care Act Requirements

Affordable Care Act requirements are determined by the size and structure of an employer’s workforce. If an employer has 50 or more full-time equivalent (FTE) employees, the ACA requires that they offer affordable coverage to at least 95% of their full-time employees. Employees that work at least 30 hours each week are defined as full-time under the ACA.  

Employers that do not offer an affordable plan may be required to make a tax payment if at least one of their full-time employees receives a health insurance premium tax credit. What constitutes an affordable plan? It is defined as an employee-only coverage plan which costs 9.69% or less of an employee’s household income.

ACA and Small Business

Insurance requirements for small businesses generally exempt employers with less than 50 FTE employees from having to provide healthcare coverage. However, if the employer decides to provide coverage, it must comply with the ACA’s requirements for small group plans. ACA compliance for small businesses allows small employers to cover their employees through the Small Business Health Options Program (SHOP) which offers them the chance to obtain high-quality coverage and reduce costs by pooling risk and streamlining administration. Employers with fewer than 25 FTE employees who are offered coverage through SHOP may be eligible for the Small Business Health Care Tax Credit. 

The ACA requires that employers who provide coverage must give their employees a “Summary of Benefits and Coverage" form which explains what their plan covers and how much it costs. Employers could be penalized if they offer coverage but do not present this form to their employees. Employers are also required to report the name and tax identification number of the responsible individual for each person covered. The ACA also requires employers to report the months for which the primary insured person was enrolled in their plan and entitled to benefits for at least one day.

Check out this article for more on ACA requirements.


hr benefits administration software


More to Discover