Affordable Care Act Basics for Small Businesses

“To insure good health: Eat lightly, breathe deeply, live moderately, cultivate cheerfulness, and maintain an interest in life.” ― William Londen

Last week we discussed the basics of contract law, which was a topic included in our overview of essential legal topics to be aware of as a small business owner. Now that we’ve discussed contract law basics, we will be discussing the legal topic of employment and labor law during this week and next week. To begin, today we are discussing Affordable Care Act Basics for Small Businesses.

As a small business owner, knowing the rules under the Affordable Care Act (the "ACA") can be beneficial to you and your business, especially for employers providing employees with health insurance options. In this post, we will be discussing the ACA employer mandate for small businesses, or those businesses with fewer than 50 full-time employees, only.

For small businesses with fewer than 50 full-time employees, employers are not required to offer health insurance to their employees. However, for those small businesses with less than 50 full-time employees who decide to offer health insurance to their employees, the health insurance plan must satisfy certain standards of "minimum essential coverage" summarized by the ACA. Examples of such plans may include CHIP & Medicaid, job-based plans, Marketplace plans, and Medicare.

Even if small businesses with fewer than 50 full-time employees are not required to meet the ACA employer mandate by offering health insurance to their employees, there are various rules under the ACA that are important for employers to be aware of. These rules can affect how a small business owner offers insurance to employees.

For example, an employer is required to report certain information about their employees to the Internal Revenue Service, even if the employer does not offer insurance. In addition, small business owners that choose to offer health insurance to their employees are required to provide their employees a “Summary of Benefits and Coverage”, which includes information about the plans being offered. In addition, if a small business owner offers health insurance to its employees, it must offer health insurance it to all eligible employees when the employees become eligible for it. This is considered a “90 day waiting period limitation”. These are just a few rules that must be followed, so it is important to thoroughly research the ACA to be fully informed of how it affects your business.

Because we have discussed general information about the ACA, it is best to consult legal, tax, or accounting advice from the proper professional, such as a tax or accounting expert or advisor or an attorney in your jurisdiction.

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