ACA basics for nonprofit employersLike all other U.S. employers, nonprofits are directly affected by the Patient Protection and Affordable Care Act. This law is also known as the Affordable Care Act, ACA or Obamacare. To get familiar with the ACA, start with the following points.
Learn about the ACA's major features
All Americans are now required to have health insurance with minimum essential coverage — or pay a fee for each month without it. In return for complying with this individual mandate, consumers gain a number of protections. Examples include:
- No exclusions for pre-existing conditions. Health insurers can no longer charge more or deny coverage to people who have chronic health conditions such asthma, diabetes or cancer.
- No arbitrary withdrawal of health insurance. Insurers can't cancel coverage when consumers make an honest mistake on an insurance application or leave out information that has little bearing on their health.
- No copayments for preventive health services. This provision applies to screenings for conditions such as high blood pressure, cholesterol, colorectal cancer, type 2 diabetes, sexually transmitted infections and depression.
- Coverage for young adults. Adult children may remain part of a parent's health insurance plan up to age 26.
- Guaranteed appeals. If denied coverage, consumers have the right to find out why and ask for a review of the decision. Insurance companies must also justify unreasonable rate hikes.
- No lifetime limits on most benefits. These limits are banned for all new health insurance plans under the ACA.
- Expanded access to emergency care. Consumers may seek emergency care at hospitals outside of their health plan's network.
Determine how many full-time employees you have
Certain provisions of the ACA apply only to larger employers based on number of full-time employees. A full-time employee is anyone who works for you — on average — 30 or more hours per week. Employees who work at least 130 hours per month are considered full-time equivalents. Hours worked by volunteers or by students as part of a federal work study program don't count toward the number of full-time employees.
To determine the size of your workforce:
- List the total number of full-time employees for each month of the prior calendar year
- List the total number of full-time equivalent employees for the same months
- Add these totals and divide the result by 12
Learn about the provisions that apply to large employers
Under the ACA, any organization with 50 or more full-time employees is considered an applicable large employer. These employers must offer affordable health insurance with minimum essential coverage — or pay a fee to the IRS. This provision is known as the employer mandate, while the fee is termed an employer shared responsibility payment.
Another requirement for applicable large employers is annual information return reporting, which amounts to filing IRS forms with specific details about health insurance offered to full-time employees. Employees must receive the same information, which they can use to claim a credit on their individual income tax returns.
Learn about the provisions that apply to small employers
Organizations with fewer than 50 full-time equivalent employees during the previous calendar year aren't required to comply with the employer mandate. These organizations are also exempt from annual information return reporting (although employers that self-fund their health insurance plans must file an annual return with details about what they offer to employees).
In addition, the ACA provides small employers with special benefits, such as the Small Business Health Options Program. This program allows organizations to team up for the purpose of buying policies from health insurers. Being part of a larger group allows small employers to receive more competitive pricing.
Another benefit is the Small Business Health Care Tax Credit. This applies to organizations that:
- Have fewer than 25 full-time equivalent employees
- Pay those employees, on average, less than $50,000 annually per employee
- Cover at least 50 percent of health insurance premiums for full-time employees
Post a notice to employees about the health insurance marketplace
Employers are encouraged to provide a written notice to employees about the health insurance marketplace. These are exchanges in each state that consumers may use to shop for ACA-compliant health insurance. Check out sample notices from the U.S. Department of Labor, this one tailored for employers that offer a health plan to some or all employees and another for employers that don't offer a health plan.
This article draws on the expertise of Grace Davies, a Minneapolis-based attorney with special interest in product liability, medical malpractice and employment discrimination.