Mon – Fri: 7:00am—5:00pm (PST)
© SBMA 2022 – all rights reserved
The Affordable Care Act (ACA), created in 2010, was designed to ensure healthcare is affordable and available to more people.
Under ACA regulations, applicable large employers (ALEs) are required to provide minimum essential coverage (MEC) to 95% of their full-time or full-time equivalent employees (someone who works at least 30 hours per week). Companies who qualify as ALEs have at least about 50 full-time employees in a calendar year.
If you fail to provide minimum essential coverage to 95% of your full-time employees, your company is subject to various penalties that could cost your business.
If you do a cost-benefit analysis, investing in MEC for your employees can save you millions, while also increasing employee engagement.
There are two methods for ALEs to determine employee benefit eligibility. They include the following:
In the monthly measurement method, an employer must count the total hours each employee worked per calendar year. If they worked more than 130 hours in one calendar year, they are automatically considered an employee who should be eligible for employer benefits.
On the other hand, the look back measurement method looks at the employee’s future employment status to determine benefit eligibility. It assesses the stability period and the predicted hours the employee will work monthly.
Both methods help employers calculate benefit eligibility to avoid fines for failing to offer federally mandated benefits to their workforce.
Other advantages of offering ACA benefits include:
ACA employer penalties are fines issued by the Internal Revenue Service (IRS) to non-compliant ALEs. The IRS takes non-compliance seriously and issues higher penalty amounts, according to the ACA times.
The two penalties they can issue are Penalty A and Penalty B. ALEs will receive one or the other, not both simultaneously.
Penalty A occurs when ALEs do not offer ACA-compliant MEC benefits to 95% of their full-time employees along with their dependents.
The IRS will issue a fine for every full-time employee, excluding the first 30 employees, who are not offered ACA benefits. Fine amounts vary depending on the tax year IRS penalizes. The 2021 tax year penalties will be $2,700.
Penalty B occurs when employers do offer benefits to their full-time employees, but those benefits are non-ACA-compliant coverage options. Fines issued for Penalty B are $4,060 per employee for the 2021 tax year for ALEs who issued non-compliant insurance options.
These fines aren’t worth the monetary financial burden of failing to provide ACA-compliant MEC benefits to your employees.
Continue reading to learn about the affordable coverage options available to you as an employer, and how much you will save by providing MEC benefits.
Employers seeking to provide affordable benefit coverage options for their employees have the opportunity to invest in ACA-compliant MEC benefits.
There are three different levels of MEC coverage options available. Knowing the difference between the three different plans helps employers decide which plan benefits their employees the most.
Investing in our ACA-compliant Minimum Essential Coverage (MEC) saves you money AND helps you hire and retain top talent in your company.
With 60% of employees vocalizing the importance of offering employee benefits when accepting a job opportunity, it’s important to understand the value that benefits bring to your company. Read more on how benefits help employee retention here.
To help you see how much you save by providing our MEC benefits to your employees, we’ve broken down what you would pay in penalties by opting out of paying ACA-compliant benefits compared to our ACA-compliant MEC benefit plan.
Try our functioning calculator below to see custom approximations for your business size.
For a company with 100 employees, providing our MEC Benefits plan can save you $187,820.39 a month, which calculates to over two million dollars in savings in one fiscal year. Reach out to our team of brokers to learn more about the benefits package that works best for you and your company.
The 2021/2022 open enrollment period broke the record for the number of people enrolling in health insurance. Over 13.6 million people enrolled this season, slightly one million more than the previous record of 12.7 million in 2016.
Advisors attribute the record-breaking enrollment to increased government subsidies that help lower out-of-pocket costs for participants. This means that employers must be prepared to meet the demand. ALEs who don’t offer health insurance can be reported to the IRS, and thus, are subject to heavy fines and penalties from noncompliance.
Make sure your business is offering ACA-compliant insurance to avoid being reported.
Offering benefits helps keep your business away from paying IRS penalties. Penalties add up quickly and take away the opportunities you could have used the redirected funds for.
Did you know there’s another benefit to providing employees with benefits? With the Great Resignation becoming a very real workforce reality, employee retention should be top of mind for employers.
Adding value to your business through employee benefits gives you as an employer an advantage in more ways than one. Read our article on how benefits improve employee morale here.
Mon – Fri: 7:00am—5:00pm (PST)
© SBMA 2022 – all rights reserved
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.
If you do not want that we track your visit to our site you can disable tracking in your browser here:
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Google reCaptcha Settings:
Vimeo and Youtube video embeds:
The following cookies are also needed - You can choose if you want to allow them: