The Affordable Care Act (ACA) is legislation that
was passed in 2010 outlining health care options and requirements for businesses. The number of
employees in your business determines what tax advantages your company
Companies with 50 or more full-time equivalent
employees are considered large businesses. Therefore, they are required to provide health care options
to its employees or accept a steep penalty under the Employer Shared
Responsibility Payment, or the “Play or Pay” penalty.
While these companies are required to offer
health insurance as a part of their benefits package, companies with less than
50 full-time equivalent employees have the option to provide these benefits. They are
exempt from the “Play or Pay” penalty and can even take advantage of certain
A provision of the ACA is the Small Business
Health Options Plan (SHOP). SHOP provides a health and dental plan option to
businesses with less than 50 full-time equivalent employees.
Outside of special cases, enrolling in SHOP is
the only way to qualify for the Small Business Health Care tax credit, another
feature of ACA. It lowers premium costs for the small businesses that qualify.
Don’t forget to account for this in your human
resources expansion plan. Once your company reaches 50 full-time equivalent
employees, the rules change so make sure to stay compliant and prevent your
company’s expansion from resulting in fines.
The bottom line is that there are health care
options for your company, no matter how big it is. The United States government
has even created a tool that will
display insurance options that are available to you based
on basic info you enter about your company. If you’re looking to learn more
about SHOP, contact your private insurance agent or a SHOP-certified agent or
Since keeping up with this evolving
legislation can be cumbersome, and sometimes costly, consider including human
resource software like Workful
which will keep your company compliant regardless of its size.