What Is the ACA Employer Mandate? 

If your Maryland business has grown to 50 or more employees, federal law may now require you to offer health insurance to your workforce. The ACA Employer Mandate requires qualifying businesses to provide affordable, comprehensive health coverage to their full-time employees or face annual IRS penalties. Understanding where your business stands is the first step toward staying compliant.

Determining if You Are an Applicable Large Employer

The IRS designates businesses as applicable large employers (ALEs) based on workforce size. If your organization employed 50 or more full-time or full-time equivalent (FTE) employees on average during the prior calendar year, you are likely an ALE. Part-time hours are combined and converted to FTEs, so even a workforce with many part-time employees can push a business over the threshold.

The Core Requirements: Affordability and Minimum Value

Once classified as an ALE, your business must offer coverage to at least 95% of full-time employees (those working 30 or more hours per week) and their dependents, and meet two key standards:

• Minimum value—The health plan must cover at least 60% of the total allowed cost of benefits.
• Affordability—The employee’s share of the premium for single coverage cannot exceed an IRS-set percentage of household income, which is adjusted annually. Employers may use approved safe harbor formulas, such as W-2 wages, rate of pay or the federal poverty line, to determine affordability.

Managing ALE Compliance and IRS Penalties

If an ALE fails to offer qualifying coverage and at least one employee receives a federal premium tax credit through the ACA Marketplace, the employer becomes subject to annual IRS tax penalties. Consistent recordkeeping, annual workforce counts and proper plan evaluation are practical ways to stay ahead of compliance issues.

Lyceum Insurance Services stays involved at every stage, from evaluating options and negotiating with carriers to launching your plan and supporting you throughout the year. Contact Lyceum Insurance Services to learn how we help businesses throughout Maryland and Frederick, MD find health coverage solutions that fit their workforce and their goals.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.