Will Our Small Business Be Penalized for Not Offering Health Insurance?

Small business owners still have questions about how the ACA impacts their business, particularly whether they will be penalized for not offering health insurance.  This article answers common questions small business owners have about their requirement to offer health insurance and ACA reporting requirements.


Is Our Small Business Required to Offer Health Insurance?
 No. If your business has fewer than 50 full-time-equivalent (FTE) employees, then you are not required to offer health insurance under the ACA.

Will Our Small Business Be Penalized for Not Offering Insurance?
No. If your business has fewer than 50 FTE employees, then there are no tax penalties and no “Employer Shared Responsibility Fees” for not offering health insurance.

How Do I Calculate Our FTE Employees?
There are three steps for calculating the number of FTE employees you have: Calculate the number of full-time employees. A full time employee works on average 30 hours per week in a given month. Factor in your part-time employees. To calculate the FTE of part-time employees, add the number of hours worked by part-time employees in a given month. Divide the total number by 120.  Add together the full-time employees and the FTE of the part-time employees. If the sum is over 50, you are an “applicable large employer.” This means that the employer mandate does apply to your business.

Source: Affordable Care Act 101 Guide

What If Our Business Grows to More Than 50 FTE Employees?
Businesses with more than 50 FTE employees who do not provide minimum, affordable health insurance will be required to pay the employer shared responsibility fee if/when an employee purchases individual insurance and receives a premium tax credit.
Medium employers (50-99 FTE employees) will be required to pay in 2016
Large employers (100+ FTE employees) will be required to pay in 2015
The employer shared responsibility fee is equal to the number of full-time employees for the month (minus 80) multiplied by 1/12 of $2,000.Phase in schedule (Source: Affordable Care Act 101 Guide)

What Are the New Health Benefits Reporting Requirements?
Although small businesses are exempt from the employer shared responsibility fees, there are new reporting requirements that may apply, depending on how many employees you have and the type of health benefits you are offering. For example:
New W-2 Reporting Requirements: If you have more than 250 W-2 employees, you must report the cost of employer-sponsored group health coverage on your employee’s W-2 forms.

PCORI/CER Plan Fees: If you offer a Healthcare Reimbursement Plan (HRP) of another self-insured health plan, you are required to pay the Patient-Centered Outcomes Research Institute (PCORI) fees. This is a research fee that is paid on an annual basis and is turned in with a Form 720 .