Do you have 50 or more full-time equivalent (FTE) workers? If so, you are required to offer health insurance to your workers under the Affordable Care Act (ACA). 

While it was passed in 2010, many small businesses are still struggling to understand all of the requirements. This is especially true as companies grow large enough to fall under the ACA’s major provisions. However, it’s important for companies of all sizes to become familiar with the ACA’s compliance requirements.

Are You Certain You’re Compliant with Affordable Care Act Requirements?

In the 2024 HR Benchmark Report survey, Asure looked at eight different HR components and asked five questions about each component. In our benefits section, ACA compliance was covered in the last one of the five questions. Then, we asked companies what level of growth they had during the previous year at the end of the survey.

We asked companies if they were certain about their ACA compliance, and the results were surprising.

• 75% of zero-growth companies were certain about their ACA compliance. 
• 85% of fast-growth firms said they were certain about their ACA compliance. 

Overall, there was a 10% spread between zero-growth and fast-growth companies. This gap increases to 19% if you’re looking at organizations that have 25 or fewer workers. It’s particularly surprising that small companies reported high compliance because they’re not required to offer ACA-compliant insurance. 

This high compliance rate is likely unrelated to how well employers understand ACA requirements. More likely, they answered yes because they understand that the ACA isn’t something that generally applies to them until they have more workers. 

ACA Rules for Small Businesses 

The ACA requires any company that has 50 full-time or FTE workers to provide ACA-compliant insurance. If you have less than 50 workers, you’re not required to offer insurance. However, if you do decide to offer insurance, the insurance plan must be in compliance with the ACA and other legislation.

If you decide to provide health insurance for your workers, there are a few ACA requirements and recommendations that can help.

Buy through the Small Business Health Options Program (SHOP)

As a small business, you are eligible to buy insurance through SHOP if this marketplace is available in your area. SHOP lets you offer workers a single plan or a choice between multiple options. Plus, you can decide how much you pay toward the insurance premiums of your workers and their dependents. 

Understand Reporting Rules 

There are specific reporting provisions you must follow if you provide health insurance for your workers. Since these can be complex, many small business owners engage outside support for ACA reporting services. 

• If compensation or wages are more than $200,000, businesses must withhold a 0.9 percent tax on employee wages and report it. 
• When employers offer self-insured health insurance, they have to file a return to report information for every covered worker. 
• In some situations, you may need to report the insurance value on the employee’s Form W-2.

Research the Small Business Health Care Tax Credit 

If you decide to offer health insurance as a small business, you may also be eligible for a tax credit. The Small Business Health Care Tax Credit may be an option if the following descriptions apply to your company.

• You have fewer than 25 FTE and full-time workers. 
• Your business covered at least 50% of your employees’ premium costs. 

Remember Important ACA Compliance Rules 

Although businesses with less than 50 workers aren’t required to offer insurance, there are certain rules they must follow if they decide to provide coverage anyway. 

• Provide 90-day waiting periods for workers who are eligible for health insurance.
• Create a Summary of Benefits and Coverage (SBC) for employees. This must detail what the plan provides and how much it is.
• Don’t pay the employer shared responsibility payment (ESRP). If you have less than 50 full-time or FTE employees, you never have to pay the ESRP. This is true whether you provide insurance for your workers or not. 

Learn More About ACA Requirements for Small Businesses 

While you’re not required to provide health insurance as a small business, the 2024 HR Benchmark Report found that 99% of fast-growth and 60% of zero-growth companies did. Workers want to receive coverage from their employer, and they’ll prioritize jobs that offer the insurance they need. Because of this, it’s important to learn as much as possible about ACA compliance for your workplace. 

If you’re interested in finding out more about ACA compliance and offering workplace benefits, we can help. Contact Asure’s team of small business HR and payroll experts today for more information.