Understanding the obligations and benefits outlined in the Affordable Care Act (ACA) is essential for employers of all sizes. This federal health care legislation imposes specific requirements based on the size and structure of your workforce. Your workforce size—determined by the number of full-time employees and full-time equivalents—directly influences your responsibilities and eligibility for benefits. For guidance on accurately assessing your workforce, refer to the page on Determining if an Employer is an Applicable Large Employer.
Small Employers
Typically, small businesses are defined as those with fewer than 50 full-time employees. These employers may qualify for various incentives, such as tax credits, and may benefit from specific programs designed to support small businesses in providing health coverage.
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Large Employers
Employers classified as large employers generally have 50 or more full-time employees, including full-time equivalents. If your organization falls into this category, different rules apply, such as the requirement to report health coverage offerings annually. If your organization has no employees, the provisions discussed here may not directly impact you, although other fees—like the insurance provider fee or the branded prescription drug fee—might still be relevant. To understand the full scope of applicable tax provisions, visit the Affordable Care Act Tax Provisions page.
Why the Size of Your Workforce Matters
- Employers with fewer than 25 full-time employees, including full-time equivalents, may qualify for a Small Business Health Care Tax Credit to offset coverage costs.
- Generally, organizations with 50 or fewer employees can access coverage options through the Small Business Health Options Program, often referred to as the SHOP Marketplace. More details are available at HealthCare.gov.
- Employers with 50 or more full-time employees must issue statements to their workers and file an annual report indicating whether and what type of health insurance was offered. These employers, known as Applicable Large Employers (ALEs), are subject to the employer shared responsibility provisions. The detecting and preventing double billing in healthcare claims rules help ensure compliance and transparency.
- Some states permit employers with up to 100 employees to participate in the SHOP Marketplace, broadening access for larger small businesses.
- Regardless of size, any employer offering self-insured health coverage must file an annual return detailing coverage information for each employee and provide similar details to covered individuals. Employers that are part of a controlled group or have common ownership are considered part of an aggregated group; in such cases, you must combine your employee counts to determine your total workforce size. Learn more about understanding double billing in business finance.
Applicable large employers can stay informed about the latest updates and additional resources through the Applicable Large Employer Information Center.
Additional Resources
- HealthCare.gov
- Small Business Health Care Tax Credit and the SHOP Marketplace
- Employer Shared Responsibility Provisions
- Information reporting obligations for Applicable Large Employers
- Reporting requirements for providers of minimum essential coverage
- Affordable Care Act Information Returns (AIR)
- ACA Information Center for Tax Professionals
- Department of Labor’s resources on health plans and benefits