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When are my employers required to provide health insurance?

Here's what you need to know...

  • The Affordable Care Act requires companies with fifty or more employees in 2015 to offer qualified health insurance coverage to their employees in 2016
  • Employers that fail to offer insurance when required must pay an employer shared responsibility payment
  • Obamacare provides incentives and credits for small businesses that offer health coverage
  • The Affordable Care Act encourages all employers to offer qualified health insurance to their employees

The Affordable Care Act contains a provision called the employer mandate. This provision requires employers with fifty or more full-time equivalent employees in the calendar year 2015 to offer qualified health insurance to at least 95 percent of their employees in 2016. Those employers that fail or refuse to do so may have to pay an employer shared responsibility penalty. Comparison shopping is the best way for employers to select health insurance options. It is the best way for employees to select health insurance plans for individual or family needs. Start comparing health insurance rates now by using our FREE tool above!

Notice and Coverage

The law has notice provisions that require employers to post notices about the existence and rights to use the Obamacare marketplace. These include the state-sponsored exchange and HealthCare.gov. The below-listed items describe the phased implementation of employee coverage under Obamacare.

  • Firms with 100 or more employees must insure at least 70 percent of their FTE workforce by 2015
  • Firms with 100 or more FTE employees must insure at least 95 percent by 2016.
  • Firms with 50 to 99 full-time equivalent employees in 2015 must insure employees in 2016
  • Firms with 49 or fewer FTE do not have to insure employees.

Employers with 49 or fewer employees

The employer mandate does not apply to firms with 49 or fewer employees. They do not have to provide health insurance for their employees unless they choose to do so. The ACA encourages employers of every size to work with employees and to provide insurance, smoking cessation, and wellness programs. The ACA offers special programs for small businesses in the SHOP marketplace.

Employers with 25 or fewer employees

The employer mandate does not apply to businesses with 25 or fewer full- time equivalent employees. Small businesses with 24 or fewer employees qualify for the SHOP program and employer tax credits.

The SHOP permits small businesses to enjoy the bargaining power of large units of employees and simplified bookkeeping.

If salaries average less than $50,000 per year, the SHOP program can reduce the costs and improve the quality if available small group policies.

Dependent Coverage

Employers with fifty or more FTE employees in 2015 must offer qualified health plans in the calendar year 2016. These plans must provide essential health benefits and insurance coverage of 60 percent or more of plan costs. They must also provide for coverage of dependents up to age 26. One of the important reforms of the Affordable Care Act protects young adults who can stay on their parent’s policies through age 25. Upon their 26th birthday, they qualify for a special enrollment period to get individual or family coverage.

Small Businesses and the Employer Mandate

The ACA offers the SHOP marketplace to help small businesses that wish to offer health insurance to their employees. When small businesses decide to offer health insurance coverage, they must offer it to all of their full-time equivalent employees and they can choose to offer it to part-time employees. The minimum participation rate is 70 percent unless states set a higher percentage.

  • If fifty or more employees, then must offer health insurance to 96 percent of employees
  • If 49 or fewer employees, then the mandate does not apply to these employers
  • If 24 or fewer employees, businesses qualify for small business tax credits
  • Maximum small business tax credits to businesses with ten or fewer employees.

Tax Credits

Small employers can get tax incentives including tax credits that add profits to the bottom line in the years the firms decide to use them. The full tax credit up to 50 percent of the employer’s share of employer health insurance premiums goes to the smallest class of business. Firms with ten or fewer employees averaging $25,000 or less per year get the full tax credit. Businesses can save the credits for up to two years and use them for tax years in which a business shows a profit.

Qualified Health Plans

When required to offer health insurance to employees, employers must offer qualified health plans. These are plans that are affordable, have a minimum value of 60 percent of plan costs, and which provide the ten essential health benefits required in the ACA. Failure to meet these standards’ will expose the employer to the employer shared responsibility fees.

Affordable Coverage

Insurance plans provided by employers must be affordable within the meaning of the Affordable Care Act.

This requirements means that insurance premiums must cover 60 percent of plan costs, and the premiums may not exceed 9.5 percent of the insured’s annual income.

Insurance that costs more than 9.5 percent of annual income is not affordable, and the employee will be eligible to receive tax subsidies and purchase insurance on the Obamacare Exchanges.

Employer Coverage and Enrollment

Employer’s must offer enrollment in employer plans within 90 days of hire. Employees that do not receive affordable insurance from an employer can enroll in the Obamacare Marketplace during Open Enrollment. If outside of Open Enrollment, then employees must qualify for the Life Events exception. The Life Events related to employers duty to provide or offer health insurance as follows.

  • Special enrollment on 26th birthday for Dependents covered through age 25
  • Insurance offered is not affordable if costs in excess of 9.5 percent of annual income
  • Loss of insurance from job loss
  • Loss of insurance from job loss as a dependent

Full-time Employees

Obamacare requires coverage of full-time employees. The law defines the requirements for counting the number of full-time employees, and it defines the full–time equivalent requirement. Full-time equivalent employees are those that work over 30 hours per week over a 120 day period, or 130 hours per month.

Employers Offer Insurance or Pay a Penalty

Obamacare requires employers with 50 or more full-time equivalent employees to offer insurance or pay a penalty. The insurance must be affordable and contain the ten essential benefits. It must cover a minimum percentage of costs. Comparison shopping is a key for employers when selecting plans for employees, and for employees when shopping the offered plan options. Start comparing health insurance rates now by entering your zip code in our FREE tool below!

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