The Patient Protection and Affordable Care Act, also known as the ACA, is the newest health care reform legislation to influence the health care industry and market. Under the law, all citizens will need to purchase some level of health insurance through various channels.

Some business leaders are concerned over the ramifications of the health care, especially the multitude of regulations and provisions against businesses. Businesses concerned about the ACA should contact ADP Solutions to find out more information about how the law will affect their company. Here are the 5 essential health care reform provisions for employers from the ACA.

Employer Mandate

Although the employer mandate sounds radical, the devil is in the details. Under the ACA, only employers with 50 or more full-time employees must supply some level of health coverage to their workers. How this is done is through tax penalties against the  business if a worker from the company with 50 or more employees has to apply for health insurance outside the business. Individuals are mandated to find health insurance for themselves, and an individual must either purchase their own insurance, purchase insurance through their state’s health insurance exchange program, enroll in a government program like Medicare, or be offered health insurance through their employer. Because of this, the employer mandate is an indirect mandate; the IRS will penalize a company when it is discovered that the workers from the 50 or more employee business are enrolling for insurance individually, through a state exchange, or through the government. The rate of the tax penalty is $2,000 per employee after 30 employees.

Counted Workers

Although the cut off of 50 full-time workers seems clear-cut, the ACA establishes rules to what counts as full-time. A full-time worker is anyone that works 30 hours or more a week, a change from conventional labor standards. In addition, all businesses need to count their seasonal and part-time workers. So if two part-time workers combine for 30 or more hours a week of work, that is one full-time worker.

Small Business Incentive to Cover

If the business has less than 50 full-time employees, there is no insurance mandate. However, to encourage coverage, the federal government will provide tax credits to businesses with less than 50 full-time employees if the business provides the employees health insurance. Click here to read more about this.

Small Business Exchanges

Besides tax credits, the ACA sets up the SHOP exchanges, which allow small businesses to join health coverage exchanges with other small businesses. Under exchange guidelines, the more small businesses that participate, the more competitive prices for health care plans will be available.

Affordability Test

Businesses big or small that provide health plans to their workers must meet an affordability test set up by the ACA. Every employer health plan cannot consume 9.5% of the worker’s income and the coverage cannot cover less than 60% of all medical costs. If a worker has to get extra coverage, through state exchanges or from the federal government, because the business health plan is not enough to cover all costs, the business will be fined $3,000.