Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish.

Subscribe to our blog

What you need to know about ACA compliance?

Posted by Kanika Sinha

August 18, 2015

The Affordable Care Act is likely to expand coverage for the uninsured and make the dread of ‘pre-existing’ conditions a relic of the past. However, like most things coming out of Washington, DC, it is complex and creates several new compliance requirements for businesses. 2016 is coming up, and all the grace periods will be over by then, and your businesses will be on the hook for ACA Compliance. Cost of non-compliance is hefty penalties and fines, and spending lots of time and resources with you very favorite federal agency, the IRS!

If you don’t want to spend your non-existent free time with IRS agents, here’s what you need to know:

Compliance and filing requirements are based on number of employees.

It would be so simple if that were true! It is based on having 50+ full-time employees or full-time equivalent employees (FTE). So what is a FTE? Anyone who works 30 hours per week is considered a full-time equivalent. So if you have 25 full-time employees and 50 half-time employees, you’d think that you don’t need to care about ACA Compliance? Wrong! You are deemed to employ 50 FTEs and you are required comply.

Tracking part-time employee hours becomes paramount.

So, you can’t just go by total- number of full-time employees on your payroll. If by end of the year you are at 30 employees, but during the course of the year, have employed various part-timers who add up to more than 20 FTE, you are an Applicable Large Employer (ALE).

You must offer “affordable” health insurance coverage to employees.

Providing access to “affordable” health insurance of “minimum value” is one of the core provisions of the ACA. However, what do these terms mean?

ACA defines “Affordable” Health Insurance as:

• Less than 9.5% of annual household income.
• Employers can also determine affordability by calculating 9.5% of employees W2 wages, hourly pay rate, or the Federal Poverty Level for an individual.

And “Minimum Value” as:

• 60% of the total cost of an employee’s medical expenses.

Three key documents are required for compliance.

If you’re an ALE, you have to create and submit the 1094-C, 1095-C, and the Written Statement to each employee.

Form 1094-C -

Employer Transmittal

Accounts for each of the following, per 2015 calendar month:

• Total headcount.
• Full-time employees.
• Whether Minimum Essential Coverage was offered.
• Whether an applicable 4980H “Safe Harbor” was used.

Deadline: February 29, 2016

Form 1095-C -

Employee Statement

Accounts for each of the following, per 2015 calendar month:

• Proof of offer of coverage. (with code)
• Employee’s share of the lowest cost monthly premium.
• Whether an applicable 4980H “Safe Harbor” was used.

Deadline: February 29, 2016

Written Statement to Each Covered Employee

• The employer’s name, address, and contact information.
• The information for the employee on the return being filed.

Deadline:  January 31, 2016


Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

We provide you with essential business services so you can focus on growth.