Aca Employer Mandate Compliance and Reporting Guide

To comply with the Affordable Care Act's (ACA) employer mandate, you'll need to understand the key requirements and deadlines. Employers with 50 or more full-time equivalent employees must provide minimum essential coverage to their staff.

The ACA employer mandate is enforced by the IRS, which will assess penalties for non-compliance. The penalty for failing to provide coverage can be up to $3,000 per employee, minus the first 30 employees.

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To comply with the Affordable Care Act (ACA) employer mandate, you need to understand the requirements. Employers with 50 or more full-time and/or FTE employees must offer affordable/minimum value medical coverage to their full-time employees and their dependents up to the end of the month in which they turn age 26, or they may be subject to penalties.

The cost of self-only coverage is considered affordable if it's less than 8.39% of an employee's household income in 2024, or 9.02% in 2025. This percentage can also be based on the employee's W-2 wages, monthly wages, or the Federal Poverty Level for a single individual.

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A plan provides minimum value if it pays at least 60% of the cost of covered services, such as deductibles, copays, and coinsurance. You can use the U.S. Department of Health & Human Services' minimum value calculator to determine if a plan provides minimum value.

Employers must treat all employees who average 30 hours a week as full-time employees. Dependents include children up to age 26, excluding stepchildren and foster children. At least one medical plan option must offer coverage for children through the end of the month in which they reach age 26.

Here's a summary of the key requirements:

The ACA employer mandate penalties can be substantial. Employers are required to offer coverage to at least 95% of full-time employees and dependents.

The penalty amount for not offering coverage is $2,570 per full-time employee minus the first 30. This penalty applies if any full-time employee purchases coverage on the Marketplace and receives a federal premium subsidy.

Employers must offer at least one plan that provides "minimum value" (pays at least 60% of the cost of covered services). The penalty amount for not offering a minimum value plan is the lesser of $3,860 per full-time employee receiving a federal subsidy for coverage purchased on the Marketplace, or $2,570 per full-time employee minus the first 30.

There are two penalties for ALEs that fail to offer ACA-compliant coverage: the 4980H(a) penalty and the 4980H(b) penalty.

The IRS assesses return penalties on employers who either don't file the required 1094-C or 1095-C forms or file an inaccurate form.

Here are the return penalties for incorrect or late ACA returns:

ALEs will receive penalty notices from the IRS, as well as notification from state and federal health insurance exchanges if an employee is eligible for advance premium tax credits.

To determine if an employer is subject to the Affordable Care Act's (ACA) employer mandate, you need to calculate and count your employees. Employers with 50 or more full-time equivalent employees are considered Applicable Large Employers (ALEs) and must comply with the employer mandate.

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There are various calculation methods for determining full-time equivalent status, but employers should consult with their legal counsel for guidance. Full-time employees work an average of 30 hours per week or 130 hours per calendar month, including vacation and paid leaves of absence.

To calculate the number of full-time equivalent employees, you can use the following formula: take the number of hours worked in a month by part-time employees, or those working fewer than 30 hours per week, and divide by 120.

When counting part-time and seasonal employees, remember that only employees working in the United States are counted. Volunteer workers for government and tax-exempt entities, such as firefighters and emergency responders, are not considered full-time employees.

Teachers and other education employees are considered full-time employees even if they don't work full-time year-round. Seasonal employees who typically work six months or less are not considered full-time employees.

Here's a quick reference guide to help you determine which employees are full-time employees:

By understanding how to calculate and count employees, you can determine if your organization is subject to the ACA's employer mandate and take steps to comply with its requirements.

Applicable large employers (ALEs) must file an annual report with the IRS to ensure compliance with the employer mandate. This report will include information on all employees who were offered and accepted coverage, and the cost of that coverage on a month-by-month basis.

Form 1095-C is used by ALEs to report to the IRS on their full-time employee health coverage. The form must be filed annually by March 31 (if filing electronically).

ALEs must also provide a statement, generally a copy of Form 1095-C, to their full-time employees by March 2 of each year about the information reported to the IRS. This statement can be furnished electronically.

The IRS will use the health coverage information reported by ALEs to verify compliance with the employer mandate to offer coverage. This information will also help identify individuals who are ineligible for premium tax credits on the Health Insurance Exchanges.

Form 1095-B is used by health plans to report annually, by March 31, member and dependent minimum essential coverage information to the IRS. This form will also be used by the IRS to determine whether individuals are complying with the ACA's individual shared responsibility requirement.

Health plans may also furnish related statements to covered individuals by March 2 of each year.

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The Affordable Care Act (ACA) employer mandate requires employers to offer affordable health insurance coverage to their full-time employees. The ACA defines affordability based on an employee's household income, with a maximum share of 9.02% of their income allowed for 2025, up from 8.39% in 2024.

To calculate affordability, you can use the Internal Revenue Service (IRS) safe harbors, which include an employee's Form W-2 wages, their rate of pay, and the federal poverty level guidelines. The IRS calculates affordability for dependents differently, allowing them to qualify for premium tax credits if the required premium contributions for family coverage exceed the 9.02% threshold.

If you offer a health reimbursement arrangement (HRA) that meets the ACA standards, it can also help satisfy the employer mandate.

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Affordable health insurance is a crucial aspect of employer-sponsored benefits. The Affordable Care Act (ACA) requires employers to offer affordable coverage to their full-time employees.

To determine affordability, the ACA uses a threshold based on an employee's household income. For 2025, employee contributions can't exceed 9.02% of their household income.

You can use the Internal Revenue Service (IRS) safe harbors to calculate affordability if you don't know your employees' household incomes. The IRS safe harbors include using your employees' Form W-2 wages, their rate of pay, or the federal poverty level guidelines.

If an employee's family coverage exceeds the 9.02% threshold, their dependents can qualify for premium tax credits and purchase individual health insurance coverage. This is known as the "family glitch."

The ACA only requires you to offer affordable coverage to your full-time employees, not their dependents. However, offering affordable family coverage can help your employees and their families save money on health insurance.

Here are the IRS safe harbors for calculating affordability:

Individual HRA (ICHRA) offers a flexible way for organizations to provide health insurance benefits to their employees. It allows employers to reimburse employees for qualifying medical expenses and individual health insurance premiums.

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Unlike traditional group health insurance plans, an ICHRA lets employees choose the qualified health insurance coverage that best fits their needs. This can be especially helpful for employees with unique medical requirements.

Employers set up a monthly allowance for their employees, who then make qualified healthcare purchases and submit receipts for reimbursement. The employer verifies the expenses and reimburses the employee up to their available allowance.

All reimbursements are tax-free for both employers and employees, which can be a significant cost savings. There are no contribution limits or participation requirements as long as the employer offers an affordable ICHRA allowance to at least 95% of their full-time employees.

You can customize the ICHRA allowance and eligibility for different employee classes, which allows you to tailor the benefit to your specific business needs. For example, you can offer the benefit only to full-time employees or to part-time workers.

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The Affordable Care Act (ACA) has specific rules for employers to follow when it comes to offering health insurance to their employees.

An employer's health insurance benefit is considered affordable if the share that employees contribute toward the benefit doesn't exceed 9.02% of their household income, as of 2025. This is an increase from the 8.39% threshold in 2024.

To determine affordability, employers can use the Internal Revenue Service (IRS) safe harbors, which include employee W-2 wages, the employee's rate of pay, and the federal poverty level guidelines.

Here's a summary of the IRS safe harbors:

The Affordable Care Act (ACA) has several key provisions that affect employers and employees.

Employers with 50 or more full-time and/or FTE employees must offer affordable/minimum value medical coverage to their full-time employees and their dependents up to the end of the month in which they turn age 26, or they may be subject to penalties.

Coverage is considered "affordable" if employee contributions for employee-only coverage do not exceed a certain percentage of an employee's household income (8.39% in 2024 and 9.02% in 2025).

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The employer mandate requires employers to offer coverage to at least 95% of their full-time employees and their dependents. For example, if an employer has 1,000 full-time employees, they must offer coverage to at least 950 of them and their dependents.

To determine full-time employee status, employers can use one of two methods: the monthly hours method or the weekly hours method. The monthly hours method requires employers to count the number of hours an employee works in a month, while the weekly hours method requires employers to count the number of hours an employee works in a week.

A plan provides "minimum value" if it pays at least 60% of the cost of covered services (deductibles, copays and coinsurance). The U.S. Department of Health & Human Services has developed a minimum value calculator that can be used to determine if a plan provides minimum value.

Here are some key dates to keep in mind:

Employers who offer coverage to at least 95% of their full-time employees and their dependents are considered to be offering coverage, even if not all employees enroll in the plan.

Employers can't impose enrollment waiting periods that exceed 90 days for all plans starting January 1, 2014. This means you'll have coverage within three months of your hire date.

All calendar days, including weekends and holidays, are counted in determining the 90-day period. Coverage must begin no later than the 91st day after the hire date.

An employer shared responsibility payment can be a significant financial burden for businesses that fail to comply with the Affordable Care Act's (ACA) employer mandate.

To be considered an Applicable Large Employer (ALE), a company must have had an average of at least 50 full-time employees, including full-time equivalent employees, in the preceding calendar year.

An ALE may owe an employer shared responsibility payment if it does not offer affordable minimum essential coverage to at least 95 percent of its full-time employees and their dependents, and at least one full-time employee receives the premium tax credit for purchasing coverage through the Health Insurance Marketplace.

An employer shared responsibility payment can be owed for each full-time employee who receives the premium tax credit if the minimum essential coverage offered by the employer is not affordable or does not provide minimum value.

An ALE member will owe the first type of employer shared responsibility payment if it does not offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents, and at least one full-time employee receives the premium tax credit for purchasing coverage through the Health Insurance Marketplace.

Here are the two types of employer shared responsibility payments an ALE member may owe:

A dependent is considered an employee's child who has not reached the age of 26, but spouses, stepchildren, and foster children are not considered dependents.

The IRS plays a crucial role in enforcing the ACA employer mandate. Employers who fail to comply may receive penalty notices from the IRS, which will notify them of any penalties owed with a letter called Letter 226-J.

Employers are required to report to the IRS information on minimum essential coverage and the coverage provided to full-time employees, starting with tax year 2015. This includes details on all employees who were offered and accepted coverage, as well as the cost of that coverage on a month-by-month basis.

To determine if a plan provides minimum value, employers can use the U.S. Department of Health & Human Services' minimum value calculator. A plan provides minimum value if it pays at least 60% of the cost of covered services (deductibles, copays, and coinsurance).

Here's a summary of the employer mandate reporting requirements:

California employers who receive a Covered California Appeal Notice may wish to appeal the notice with the U.S. Department of Health and Human Services (HHS) within 90 days of the date of the notice.

The notice is sent to employers when an employee has enrolled in a Covered California health plan and received an advanced premium tax credit (APTC). This can happen if the employer does not meet the ACA's health coverage requirements, and at least one full-time employee receives an APTC through Covered California.

An HHS appeal will not determine whether an employer actually owes the employer shared responsibility payment penalty. Only the IRS can make this determination through the Letter 226-J process.

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The IRS requires health plans and Applicable Large Employers (ALEs) to report to the IRS information on minimum essential coverage and the coverage provided to full-time employees, starting with tax year 2015.

All CalPERS health plans meet the minimum essential coverage requirement, which is a must for most Americans to have qualifying health insurance.

Starting in 2019, the individual shared responsibility penalty was reduced to zero, but the provision still requires individuals to report health coverage to the IRS.

Employers will receive penalty notices from state and federal health insurance exchanges if they are in violation of the Employer Shared Responsibility Provision (ESRP).

The IRS will notify employers if they must pay an ESRP penalty with Letter 226-J, giving them 30 days to agree with or appeal the amount.

All Applicable Large Employers are required to file an annual report that ensures compliance with the employer mandate, including information on employees who were offered and accepted coverage, and the cost of that coverage on a month-by-month basis.