Affordable Care Act (ACA)

Definition

The Affordable Care Act of 2010 (often called Obamacare) created a comprehensive set of health insurance reforms. The provisions most relevant to employers: the Employer Shared Responsibility Mandate (50+ FTE employers must offer affordable coverage to full-time employees or pay penalties), the 1094/1095-C reporting requirements (annual reporting of coverage offered to each FTE), and various plan design requirements (no annual/lifetime maximums, preventive care first-dollar coverage, dependent coverage to age 26).

The employer mandate calculation is complex: FTE counts (not headcount), affordability tests based on safe-harbor methodologies, and stringent reporting deadlines. Penalty exposure for non-compliance can reach into six figures for mid-sized employers.

PEOs handle ACA reporting automatically for the co-employed workforce, including the 1094/1095-C filings that catch many non-PEO employers off-guard at year-end.

Common questions about Affordable Care Act (ACA)

Related terms

• Group health insurance — Health insurance purchased by an employer to cover its employees, typically at lower per-employee cost than individual policies.
• Employer mandate — The ACA requirement that applicable large employers offer affordable health coverage to full-time employees or pay penalties.
• Family and Medical Leave Act (FMLA) — A federal law giving eligible employees up to 12 weeks of unpaid, job-protected leave per year for specified family and medical reasons.

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