How the Affordable Care Act Affects Small Businesses
The Affordable Care Act established the Small Business Health Options Program (SHOP) for small employers with (1 - 50 full-time equivalent employees) that want to provide health and dental coverage to their employees.
The following includes additional parts of how the Affordable Care Act affects employers:
- Mandatory reporting - Employers are required to provide certain information about the Marketplace to their employees, whether they offer health insurance or not.
- 90-day maximum waiting period - Employers that offer health insurance to their employees, must offer it to all eligible employees within 90 days of their employment start date.
- Summary of Benefits and Coverage (SBC) disclosure rules - Employers must provide employees with a standard "Summary of Benefits and Coverage" (SBC) form explaining what their health plan covers and what it costs. The purpose of the SBC is to help employees understand their health insurance options. Employers that do not provide this information may face a penalty for non-compliance.
- Flexible Spending Accounts (FSAs) - For 2019, the maximum amount employees may contribute to their health FSA account is $2,700, which is up from the 2018 limit of $2,650. That limit does not apply to employer contributions to the employees’ FSA.
- Workplace wellness programs - The Affordable Care Act creates incentives to promote employer wellness programs and other activities that support healthier workplaces. The maximum reward to employers using a wellness program that's contingent on employee health has increased from 20% to 30% of the cost of health coverage. The maximum reward for programs designed to prevent or reduce tobacco use is 50%.
- Employer Shared Responsibility Payment - Businesses with 50 or more FTEs that don't offer insurance that meets certain minimum standards, may be subject to the payment.
- Reporting information on health coverage by employers and insurance companies - The health care law requires the following organizations and some other parties to report that they provide health coverage:
- Employers with 50 or more FTEs
- Health insurance companies
- Self-insuring employers of any size
- Medical Loss Ratio rebates - Insurance companies must spend at least 80% of premium dollars on medical care. Insurance companies that don't meet this requirement must provide rebates to policyholders — usually an employer that provides a group health plan. Employers who get these premium rebates must allocate the rebate properly.
Additional resources for employers - ACA Employer Call Line at 1-800-355-5856.