The Affordable Care Act (ACA) is a federal law that changed the health care landscape in 2010. This law requires employers of a certain size (50 or more FTEs) to offer health benefits coverage. We call these employers “Applicable Large Employers” (ALEs).
The mandate requires you to offer health coverage if you have more than 50 employees. The law also requires ALEs to offer coverage to employees for their dependent children below the age of 26. ALEs that do not offer health coverage could face a penalty from the IRS. This penalty is triggered when an employee purchases health insurance on Covered California with a federal subsidy.
Small Business Group Size in California
California recently expanded the group size to include any business with at least one but no more than 100 FTEs. Historically, small group size in the health insurance industry was determined for employers that had up to 50 FTEs. With the recent expansion, employers with 51- 100 FTEs are now also considered a “small group”. CCSB changed its eligibility requirements to align with the state expansion of small group. This means that employers with up to 100 FTEs may be eligible to enroll in Covered California.
Employer Contribution Requirement
If you are eligible to participate in CCSB, you need to contribute at least 50% of the employee-only coverage. This means that you must pay for at least 50% of the employee-only premium for the reference plan that you choose. Your employees’ premium contribution and out-of-pocket costs will depend on your reference plan and total contribution, your selected level(s) of coverage and the plan(s) your employee selects. There is no minimum dependent contribution requirement.
Employee Participation Rate Requirement
When offering coverage through CCSB, at least 70% of your eligible employees must enroll with CCSB. CCSB do not count valid waivers in calculating the participation rate. Valid waivers may include employer sponsored Coverage, military coverage, Medi-Cal or Medicare.
Annual Special Enrollment Period
If you fail to meet the contribution or participation requirements, Covered California offers an Annual Special Enrollment Period from November 15 to December 15.
During this period, you can enroll for health coverage starting January 1 of the following year.
You can enroll in Covered California at any time throughout the year. However, you must have at least 70% of your employees enroll in a plan and contribute at least 50% of the cost.
Group Dental and Vision Coverage
Employers can obtain dental and vision coverage through CCSB. Dental and vision plans are an elective benefit that you can choose to offer as part of your health plan program. The Employers must select dental and vision coverage in order for their employees to select a plan.
Small Business Tax Credits
ACA offers access to federal tax credits that make providing employee health insurance more affordable. You may be eligible for a federal tax credit up to 50% of your employee premium contribution through CCSB.
The tax credit amount depends on several factors such as the number of employees and the contribution amount.
If you have less than 25 employees with an average annual salary of less than $56,000, you will be eligible for the tax credit.
If you have fewer than 10 employees with wages averaging less than $27,000, you will be eligible for the maximum credit.
The maximum available tax credit is 50 percent of insurance premium expenses and is available for a total of two consecutive tax years.
Shop Smart with Covered California Small Business Broker
Working with a health insurance broker can save you a lot of headache throughout your shopping process. That is why it is important to take your time finding your ideal health insurance broker. When you invest that time, you will find someone that you like and trust.