Welcome to the first post in our series: "ACA Essentials: Does ACA Compliance for Small Businesses Apply to Me?"
When we start to think about the Affordable Care Act (ACA), it's a good idea to start with a timeline to orient ourselves to some of the components of the ACA for small businesses that have been in effect for a while.
When the ACA was signed into law in 2010, some components were immediately in effect, but others have been phased in over the years, as you can see in the timeline below. Some are health insurance reforms aimed at group health plans, but some are new notice and communication requirements, like the Summary of Benefits and Coverage (SBC), which first became effective in 2012.
2013 brought additional notice requirements such as the Employee Notice of Coverage Options, as well as limits when it comes to Flexible Spending Accounts (FSAs). 2014 brought waiting periods of 90 days or less for plans and wellness incentives.
This year is a big one for employers when it comes to the ACA. The Employer Shared Responsibility mandate is now fully in effect for larger employers (50 or more full-time and full-time equivalent employees) and the new IRS reporting is now in effect. The reporting, which I will cover in a later post, started this year, and while annual, it requires data on a monthly basis.
So, exactly which of these parts apply to you if you're a small business? Well, it depends. If you offer health care, which many small businesses do, the following health insurance reforms apply to you regardless of business size:
- Health plans must generally cover:
o Essential health benefits.
o Preventive care without charging a deductible, co-pay, or coinsurance.
o Dependents up until age 26 (if plan covers dependents).
- Health plans are prohibited from:
o Denying coverage to individuals with pre-existing conditions.
o Having a waiting period longer than 90 days.
o Imposing annual and lifetime limits on "essential benefits."
o Rescinding coverage unless there is fraud or an individual makes an intentional misrepresentation of a material fact.
- Additional changes include:
o Employee contributions to health flexible spending arrangements (FSAs) are limited to $2,550 per year.
o An excise tax on high-cost plans (postponed until 2020)
o Nondiscrimination rules for fully insured plans (still being determined)
Some of the other ACA changes depend on how many employees you have.
For example, the ACA requires employers with 50 or more full-time and full-time equivalent employees to offer health coverage to full-time employees (defined as those working on average 30 or more hours per week) and their dependents or they may be required to pay a penalty. This is commonly known as the Employer Mandate or the Employer Shared Responsibility provision.
I'll use this chart throughout the series to highlight the applicable areas of the ACA for small businesses that differ from companies with more employees.
Now that we've focused on the major components of the ACA and the general health care reforms in place, in my next post I'll talk specifically about an item only applicable to small businesses, the Small Business Health Care Tax Credit (HCTC) – and how to know whether you qualify.
In the meantime, visit the Health Care Reform page for more information on the ACA timeline.
Read the rest of the series.
Visit and subscribe to ADP's "Eye on Washington" for the latest on Health Care Reform and other regulations impacting employers: https://www.adp.com/tools-and-resources/adp-research-institute/research-topics/legislative-updates.aspx
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