ACA Requirements for Employers in 2024

Introduction

The Affordable Care Act (ACA) includes several requirements for employers to ensure that employees have access to affordable health insurance. This guide outlines the ACA requirements for employers in 2024, helping you understand your obligations and avoid potential penalties.

Employer Mandate Overview

The employer mandate, also known as the Employer Shared Responsibility Payment, requires certain employers to offer health insurance to their full-time employees or face penalties. This mandate primarily affects Applicable Large Employers (ALEs).

Sources:

• IRS – Employer Shared Responsibility Provisions

Applicable Large Employer (ALE) Status

An ALE is an employer with 50 or more full-time employees, including full-time equivalent employees, on average during the previous calendar year. ALEs are subject to the ACA’s employer mandate and must offer health insurance that meets specific standards.

Sources:

• HealthCare.gov – Applicable Large Employer

Minimum Essential Coverage (MEC)

Employers must offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees and their dependents. MEC is a health insurance plan that meets the basic health benefits as outlined by the ACA.

Sources:

• HealthCare.gov – Minimum Essential Coverage

Minimum Value Standard

The health insurance offered by employers must meet the minimum value standard. This means the plan must cover at least 60% of the total allowed costs of benefits and provide substantial coverage for inpatient hospital and physician services.

Sources:

• IRS – Minimum Value

Affordability Standard

The health insurance offered must be affordable for employees. For 2024, a plan is considered affordable if an employee’s share of the premium for the lowest-cost self-only coverage does not exceed 9.12% of their household income.

Sources:

• IRS – Affordability of Employer Coverage

Reporting Requirements

Employers subject to the ACA must report information about the health coverage they offer to the IRS and to their employees. The key forms used for reporting include:

• Form 1095-C: Provides information about the health insurance coverage offered to full-time employees.
• Form 1094-C: Transmittal form that accompanies Form 1095-C.

Employers must furnish Form 1095-C to employees by January 31 and file Forms 1095-C and 1094-C with the IRS by February 28 (paper filing) or March 31 (electronic filing).

Sources:

• IRS – Information Reporting by Applicable Large Employers

Penalties for Non-Compliance

Employers who do not comply with the ACA requirements may face penalties. The penalties are divided into two categories:

1. Penalty for Not Offering Coverage: If an ALE does not offer coverage to at least 95% of its full-time employees and their dependents and any full-time employee receives a premium tax credit for purchasing coverage through the Marketplace, the employer may face a penalty. For 2024, the penalty is $2,970 per full-time employee, minus the first 30 employees.
2. Penalty for Offering Unaffordable or Low-Value Coverage: If an ALE offers coverage that is not affordable or does not provide minimum value and any full-time employee receives a premium tax credit, the employer may face a penalty. For 2024, the penalty is $4,460 per full-time employee who receives a premium tax credit.

Sources:

• IRS – Employer Shared Responsibility Payment

Conclusion

Understanding and complying with the ACA requirements is essential for employers to avoid penalties and ensure their employees have access to affordable health insurance. For personalized assistance and to learn more about your obligations under the ACA, give us a call at 833-942-3776 or visit our contact page. We are available 9-5 PST every weekday and are ready to help.