Obamacare: Small Business Compliance with the Affordable Care Act
By FindLaw Staff | Legally reviewed by Bridget Molitor, J.D. | Last reviewed November 10, 2020
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How Does the Affordable Care Act Affect Businesses?
The Patient Protection and Affordable Care Act (ACA) likely affects your small business in several ways. How it affects you depends on the number of full-time employees that work for you.
This article focuses on the basics of Obamacare for a small business owner, how to comply, and your healthcare options as an employer. See Obamacare Basics: Understanding the Affordable Care Act for a general overview of the ACA.
Are All Small Businesses Subject to the ACA?
In general, you won't be penalized for not offering health insurance benefits to your employees if you have fewer than 50 employees who are full-time. But you'll need to provide your current and newly hired employees with a Notice of Marketplace Coverage Options and comply with the other provisions of the ACA.
Which Employers Are Subject to the ACA?
Only large businesses, those with 50 or more full-time equivalent employees working 30+ hours per week on average are required to offer health insurance coverage or pay a penalty. These employers will automatically be subject to the Employer Shared Responsibility Mandate.
Under the employer mandate, large businesses must fulfill the following:
- Provide an "affordable" health insurance
- Offer a minimum acceptable health plan, and
- File reports of the healthcare coverage they provide
Small Business ACA Compliance
If you already offer health insurance, you won't have to change plans as long as your insurance conforms to the minimum standards governed by the ACA. Your employees may purchase a private plan instead, but you aren't required to make a contribution to their premiums if they choose to do so.
The small business section of HealthCare.gov provides additional information about small business compliance with the ACA.
The Small Business Health Options Program
The Affordable Care Act has created the Small Business Health Options Program (SHOP) for small business owners who want to provide health coverage to their employees. Accordingly, small businesses may benefit from some of the ACA's incentives, such as access to the health insurance marketplaces and certain exemptions.
Qualifying for a Tax Credit
Through the SHOP program, the ACA offers generous Small Business Health Care Tax Credits and other incentives to small businesses with fewer than 25 full-time workers. This tax credit is worth up to 50% of your contribution to FTEs' health insurance premiums.
To qualify for this, you must:
- Pay at least half of your employees' total health insurance premium costs, and
- Pay average annual wages below $50,000.
Go to the healthcare tax credit calculator if you want to learn more about tax credits or if you want a specific estimation of the small Business Health Care Tax Credit you qualify for.
Summary of Benefits and Coverage
All small business owners are required to provide their employees with a summary of benefits and coverage form, which explains the cost and coverage of their plan. This notice allows employees to compare the employer-sponsored plan with those offered in the private market. Penalties may be levied for noncompliance (although there is no individual mandate to purchase coverage).
- Regardless of company size, employees who are eligible for employer-sponsored health coverage may not be made to wait more than 90 days before coverage kicks in.
- Employers that implement health-contingent workplace wellness programs are eligible for a reward of up to 30% of the cost of health coverage (up to 50% for smoking cessation programs); see Workplace Wellness Programs for more general information.
- Employers must provide current and newly hired employees with a Notice of Marketplace Coverage Options (this form is for employers currently offering coverage).
Need Help With Obamacare Small Business Compliance? Contact an Attorney
Business compliance with laws and regulations can be quite complex, even for the smallest business. But failure to comply can be extremely costly. Don't guess your way through the process; contact an experienced business attorney near you for expert advice on small business compliance with the ACA.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
Contact a qualified health care attorney to help navigate legal issues around your health care.