Understanding the ACA Policy Options


It should come as no surprise that the Affordable Care Act (ACA), or Obamacare, is confusing to business owners, independent contractors, and employees. The sheer volume of verbiage alone is a lot but the fact that the bill itself is a moving target causes additional questions. The confusion over state and federal exchanges is also still undecided.

The “Patient Protection and Affordable Care Act” is 906 pages and the accompanying “Health Care and Education Reconciliation Act of 2010″ is 55 pages. To further compound the matter, it is estimated that the ACA regulations will be 5 times the length of the statute once the dust settles. As far as ACA for mid-sized businesses goes, understanding and complying with policy options is minimally burdensome.

Do Employees Qualify for Medicaid?

The expansion of Medicaid was instituted to take the financial pressure off some business owners. To be eligible, employees must earn $16,105 or less for individuals and $32,913 or less for a family of four. Originally, the bill required all states expand Medicare but a Supreme Court ruling removed that requirement and many states opted out.

If your employees qualify for Medicaid, you would be wise to encourage them to sign up. Even in states that did not expand it, the federal government still covers the bulk of the funding for the program.

Lowering the Cost of the Affordable Care Act

Small companies, those with fewer than 50 employees, are currently not required to provide medical coverage for their employees. However if a company like a construction company expands to over 50 employees due to contract requirement deadlines (it happens more often than you might expect), could  be staring at a large penalty for not providing coverage.

Very large corporations tend to have fairly deep pockets and are more likely to be able to absorb the cost of medical coverage for employees. However, as far as ACA for mid-sized businesses is concerned, the rising insurance costs that we are already seeing are particularly difficult. One solution that many of these businesses are adopting is turning full-time employees into part-time ones.

Part-time is considered less than 30 hours per week with the caveat that employees working service hours equal to at least 130 hours per month, for more than 120 days, during the course of a year, are called full-time equivalent employees (FTE) and still qualify as full-time workers. However, cutting hours as needed may turn out to be a poor choice because worker discontent often leads to lowered productivity.

Another unexpected obstacle of the ACA is that spouses are not considered dependents, so some businesses are dealing with rising insurance costs by not covering them anymore. Once again, although this will lower the bottom line, you may have employee morale issues to deal with.

When Must Medical Coverage Begin?

If you employ more than 200 full-time employees, you are now required to auto-enroll full-time, new-hires as well as providing an opt-out.

It is easy to see for mid-sized businesses ACA is complicated to implement. It is a good idea to find a specialist that is well versed with the law as failure to comply can get expensive quickly.

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