The Affordable Care Act (ACA), establishes an Individual Mandate for all citizens to obtain insurance. Similarly, it establishes an employer mandate for all employers of a certain business size to provide insurance to employees.
Beginning in 2015, employers with 50+ full-time employees or full-time equivalents must offer medical coverage that is "affordable" and provides "minimum value" to full-time employees and their children up to age 26 or face penalties.
Affordability & Minimum Value
Coverage is considered “affordable” if employee contributions are less than 9.5% of:
· Employee's W-2 wages
· Employee’s monthly wages (hourly rate x 130 hours per month),
· Federal Poverty Level for a single individual
A plan must pay 60% of the cost of covered health services to provide "minimum value." The minimum value calculator is available online.
The penalties will be adjusted in future years, but for 2015, for employers who have more than 50 full-time employees (FTEs), penalties for employers who do not offer coverage begin at $2000 per FTE, minus the first 30 (so apply to the 31st employees, and after).
Small Businesses & the State Exchanges
The State Insurance Exchanges (Marketplaces) provide an opportunity for small businesses to offer insurance to their employees like larger companies. A provision of the exchanges, the Small Options Program (SHOP), will provide way small business employers to choose from a range of plans they want to offer and decide on a contribution toward the coverage; employees then select the plans that best meets their needs and resources. Employers can offer plans from several insurance companies, but will receive a single bill and write a single check.
Small employers participating in SHOP may be eligible for a tax credit of up to 50% of their premium payments if they have 25 or fewer employees, pay employees an average annual wage of less than $50,000, offer all full time employees coverage, and pay at least 50% of the premium. Employees offered affordable, quality health insurance by their employer, however, are not eligible for premium credits for coverage purchased through the Exchange.
Affordable Insurance Exchanges- Small Business Fact Sheet – Health Care.gov
Health Reform & The Employer Mandate – US Chamber of Commerce