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Components of the Affordable Care Act (ACA) That Apply to Small Business

Posted on 10-30-2015
Components of the Affordable Care Act (ACA) That Apply to Small Business

By: Sal Hazday, Senior VP & GM, SBS Insurance Services, ADP LLC

When we start to think about the ACA and how it applies to small businesses, it's a good idea to start with a timeline to orient ourselves to some of the components of the ACA that have been in effect for a while. 

When the ACA was signed into law in 2010, some components were immediately in effect, but others have been phased in over the years, as you can see in the timeline below. Some are health insurance reforms aimed at group health plans, but some are new notice and communication requirements, like the Summary of Benefits and Coverage (SBC), which first became effective in 2012. 

2013 brought additional notice requirements such as the Employee Notice of Coverage Options, as well as limits when it comes to Flexible Spending Accounts (FSAs). 2014 brought waiting periods of 90 days or less for plans and wellness incentives. 

This year is a big one for employers when it comes to the ACA. The Employer Shared Responsibility mandate is now fully in effect for Applicable Large Employers (also known as ALEs, which are companies with 50 or more full-time or full-time equivalent employees) and the new IRS reporting is now in effect. The reporting starts in 2016, and while annual, it requires data on a monthly basis, going back to January of 2015. 

So, exactly which of these parts apply to you if you're a small business? Well, it depends. If you offer health care, which many small businesses do, these health insurance reforms apply to you regardless of business size: 

  • Essential health benefits 
  • Preventive care 
  • Primary care physicians
  • Ban on pre-existing condition exclusions 
  • Dependent coverage until age 26 
  • Waiting periods limited to 90 days
  • Nondiscrimination rules for fully insured plans (still being determined)
  • Rescissions prohibited
  • Annual limits on FSAs, HSAs and HRAs 
  • Annual dollar limits on essential health benefits prohibited
  • Exercise tax on high-cost plans (2018)

It also depends on how many employees you have. The chart below helps to highlight the different areas of the ACA that apply depending on the number of employees.

The reality is that when it comes to Employer Shared Responsibility and the Employer Mandate, if you are self-insured and if you have significantly fewer than 50 full-time employees (or full-time equivalent employees) many aspects of the ACA will not apply to you. 

For more information on the Affordable Care Act, please contact your local ADP representative, or visit us at www.adp.com/health-care-reform. * 

*ADP does not provide legal advice. 

PKF Texas' ADP Partner: Blaze Wrobleske, (832) 622 5192