What are ACA Requirements?
The Patient Protection and Affordable Care Act is a comprehensive set of laws and guidelines. It aims to ensure that everyone has adequate health insurance coverage. It also looks to regulate the rising healthcare costs by bringing in healthy people along with the people with health problems into the system. However, the process is pretty complicated and confusing. There are several articles online that explain the ACA requirements in detail. Here’s a gist of it. If you keep these in mind, you’ll be able to avoid penalties from the IRS.
Employers with a few employees aren’t required to offer health insurance coverage to their employees but if you do, you do get certain tax benefits. If you have less than 25 full time employees, you’re not obligated to provide insurance. However, you need to keep an eye on the numbers to avoid penalties. Even if a group of your part time employees club together and do work equivalent to that of a full time employee, you might need to provide insurance under ACA requirements.
If you employ more than 50 employees, you need to provide adequate health insurance coverage by law. You’ll need to fill forms with the IRS with the details of the employees and their dependents insured. You’ll also need to provide the details to your employees so that they can file them with the IRS.
What is a Full Time Employee?
According to ACA requirements, full time employees are people who work for 30 hours a week or 120 days a year or more. If someone you consider a part time employee works for that much time, they’re considered full time and you’re required to offer insurance to them.
Until 2015, if you have more than 50 employees, you’re required to provide at least 70% of them with adequate insurance. From 2016, if you have more than 50 employees, you’re required to provide at least 95% of them with insurance.
What is Adequate Insurance?
We keep mentioning adequate insurance cover, but what does that include? Consider the following ACA requirements:
- The insurance must provide employees with the minimum 10 essential benefits. These benefits include things like hospital, emergency services, maternal care and newborn care, prescription drugs, etc.
- The insurance should also provide minimum value. This means that the insurance companies should pay at least 60% of the covered benefits.
- The plans are a guaranteed issue. This means that pre-existing illnesses don’t matter in the application process and shouldn’t affect the premium rate.
- The insurance companies aren’t allowed to set the lifetime maximum benefit on the insurance coverage. This means that they can’t set a limit to how much they would pay during the insured person’s life.
Forms and Deadlines
The employer needs to provide the 1095 C forms to their employees as a part of ACA requirements. They also need to file the same forms with the IRS. The deadline for providing the forms to the employees is 31st January and to providing the forms to IRS is 29th of February for paper forms and 31st of March for e-forms.
Content by Webvisable