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What is a Small Employer Under ACA?

The Affordable Care Act (ACA) is legislation that was passed in 2010 outlining health care options and requirements for businesses. The number of employees in your business determines what tax advantages your company qualifies for.

Companies with 50 or more full-time equivalent employees are considered large businesses. Therefore, they are required to provide health care options to its employees or accept a steep penalty under the Employer Shared Responsibility Payment, or the “Play or Pay” penalty.

While these companies are required to offer health insurance as a part of their benefits package, companies with less than 50 full-time equivalent employees have the option to provide these benefits.   They are exempt from the “Play or Pay” penalty and can even take advantage of certain tax breaks.

A provision of the ACA is the Small Business Health Options Plan (SHOP). SHOP provides a health and dental plan option to businesses with less than 50 full-time equivalent employees.

Outside of special cases, enrolling in SHOP is the only way to qualify for the Small Business Health Care tax credit, another feature of ACA. It lowers premium costs for the small businesses that qualify.

Don’t forget to account for this in your human resources expansion plan. Once your company reaches 50 full-time equivalent employees, the rules change so make sure to stay compliant and prevent your company’s expansion from resulting in fines.

The bottom line is that there are health care options for your company, no matter how big it is. The United States government has even created a tool  that will display insurance options that are available to you based on basic info you enter about your company. If you’re looking to learn more about SHOP, contact your private insurance agent or a SHOP-certified agent or broker.

Since keeping up with this evolving legislation can be cumbersome, and sometimes costly, consider including human resource software like Workful which will keep your company compliant regardless of its size.