The health care law & business

How the Affordable Care Act affects small businesses

The Affordable Care Act established the SHOP Marketplace to help small employers offer insurance to their employees. But other parts of the health care law (sometimes called the ACA, or “Obamacare”) affect employers too.

Required reporting about the Marketplace to your employees

The health care law requires you to provide certain information about the Marketplace to your employees, whether you offer health insurance or not. Get details on reporting requirements from the U.S. Department of Labor.

90-day maximum waiting period

Under the health care law, if you offer health insurance to your employees, you must offer it to all eligible employees within 90 days of their employment start date. The IRS provides guidance on the 90-day waiting period rules (PDF).

Summary of Benefits and Coverage (SBC) disclosure rules

Employers must provide employees with a standard “Summary of Benefits and Coverage” (SBC) form explaining what their health plan covers and what it costs. The purpose of the SBC is to help employees understand their health insurance options. You could face a penalty for non-compliance. Learn more about SBCs and see a sample completed form.

Flexible Spending Accounts (FSAs)

Under the health care law, employees can’t contribute more than $2,550 to their Flexible Spending Accounts per year in tax year 2015. That limit doesn’t apply to employer contributions to the employees’ FSAs. Employers have two options to let employees carry over unspent FSA funds into the following plan year. Learn more about these options (PDF).

Workplace wellness programs

The Affordable Care Act creates incentives to promote employer wellness programs and other activities that support healthier workplaces. The maximum reward to employers using a wellness program that’s contingent on employee health has increased from 20% to 30% of the cost of health coverage. The maximum reward for programs designed to prevent or reduce tobacco use is 50%. Learn more about wellness incentives.

Employer Shared Responsibility Payment

Businesses with 50 or more full-time (or full-time equivalent) employees that don’t offer insurance, or offer coverage that doesn’t meet certain minimum standards, may be subject to the payment. Learn more about the Employer Shared Responsibility Payment from the IRS.

Reporting information on health coverage by employers and insurers

The health care law requires the following organizations and some other parties to report that they provide health coverage:

  • Employers with 50 or more full-time (or full-time equivalent) employees
  • Health insurance issuers
  • Self-insuring employers of any size

Learn more about these reporting requirements from the IRS.

Medical Loss Ratio rebates

Under the health care law, insurance companies must spend at least 80% of premium dollars on medical care. Insurers that don’t meet this requirement must provide rebates to policyholders — usually an employer that provides a group health plan. Employers who get these premium rebates must allocate the rebate properly. Learn more about federal tax treatment of Medical Loss Ratio rebates from the IRS.

More health care resources for businesses