What is the ACA?
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The Affordable Care Act (ACA) is a federal law designed to expand access to health insurance.
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ACA requirements depend on the size of the business.
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For employers, the most significant provision is the Employer Shared Responsibility, also called the Employer Mandate, which applies to Applicable Large Employers (ALEs).
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An employer is considered an ALE if it averaged 50 or more full-time employees, including full-time equivalents, in the prior calendar year.
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It’s important to note the ACA definition of a Full-Time Employee. Employees are considered full-time they work 30 hours per week OR 130 hours per month. This is lower than the traditional 40-hour standard and often catches employers by surprise.
What are the core ACA requirements for Applicable Large Employers?
If an employer is an ALE, they must meet all three of the following standards:
1. Offer Coverage to at least 95% of Full-Time Employees
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Coverage must be offered to full-time employees and their dependents, including children up to 26 years old.
2. Minimum Essential Coverage (MEC)
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The plan must qualify as Minimum Essential Coverage, meaning it satisfies ACA’s baseline benefit requirements.
3. Affordability & Minimum Value
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Affordability: Employee-only premiums cannot exceed a set percentage of household income.
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Minimum Value (MV): Plan must cover at least 60% of expected medical costs.
What Triggers ACA Penalties?
ACA penalties are enforced by the IRS and are triggered when both conditions are met:
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The employer fails to offer compliant coverage or fails affordability/MV rules
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At least one full-time employee receives a Premium Tax Credit through the ACA Marketplace.
What are the types of Penalties that can be issued?
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4980H(a) – Failure to offer coverage to at least 95% of full-time employees
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4980H(b) – Coverage offered but not affordable or not minimum value
What support can we provide?
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Employer Size & ACA Applicability Guidance: our solution provides extensive reporting to ensure hours are tracked according to the ACA standards and that employers know when they meet the requirement as an ALE. Reports are also ready and available for potential audits.
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Group Benefit Plans design and affordability strategy to ensure MEC and MV standards are met.
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IRS Reporting & Documentation Support with Forms 1095 preparation and processing
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Ongoing compliance monitoring and risk management as well as employer communication & education
