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The ACA’s employer shared responsibility provision (often called the employer mandate) requires that businesses with 50 or more full-time or full-time-equivalent employees (termed “Applicable Large Employers” or ALEs) offer health insurance to their workforce or potentially pay a penalty. Specifically, ALEs must offer minimum essential coverage that is affordable and provides minimum value to at least 95% of their full-time employees (those working 30+ hours per week) and their dependent children up to age 26. If an ALE fails to offer coverage, or offers coverage that is not affordable or lacks minimum value, and at least one employee obtains subsidized insurance through an ACA marketplace, the employer may incur penalties. These penalties can be substantial (in the range of roughly $2,500–$4,500 per affected employee annually, adjusted each year).
Under ACA rules, an employer’s health plan is considered “affordable” if the employee’s share of the premium for self-only coverage does not exceed a certain percentage of their household income (around 9% – this threshold is 9.12% for plan year 2023, indexed annually). The plan must also meet minimum value, meaning it covers at least 60% of expected total medical costs on average. If coverage is not affordable or doesn’t meet minimum value, the employer could face a different ACA penalty if employees then use tax credits to buy insurance elsewhere.
There is no specific federal law requiring employers to pay a set percentage of premiums, but the affordability rule effectively limits how much of the cost can be passed to employees. (Many insurers and states also impose health insurance employer contribution rules in the small-group market – for example, requiring employers to contribute at least 50% of employee premiums – to ensure broad participation).
Small businesses with fewer than 50 full-time equivalent employees are not required to offer health insurance under the ACA. In other words, if you have, say, 10, 20, or even Forty employees, federal law does not mandate that you provide medical insurance benefits (though you may choose to do so for competitiveness or other reasons). However, the ACA provides incentives for small employers to offer coverage. Businesses with fewer than 25 full-time employees and average wages below a certain threshold may qualify for the Small Business Health Care Tax Credit if they provide health insurance and contribute a significant portion of the premium. Additionally, small employers can use the ACA’s Small Business Health Options Program (SHOP) marketplace in many states to shop for group plans, though SHOP uptake has been limited in recent years. There are also alternative arrangements like QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) that allow small employers to reimburse employees tax-free for individual insurance premiums. It’s important to note that while the ACA mandates apply at 50+ employees, no federal law forces very small businesses to provide coverage – the decision for small employers to offer health insurance is generally voluntary, influenced by market competition for talent rather than legal requirements.
The ACA imposes reporting obligations on employers, even though it doesn’t force small businesses to offer insurance. All ALEs (50+ employers) must comply with IRS reporting by filing Forms 1094-C and 1095-C each year, detailing the health coverage offered to each full-time employee.
Employers must also furnish 1095-C forms to employees, showing months of coverage. This reporting verifies whether the employer met the mandate and whether employees had an offer of coverage (and thus aren’t eligible for marketplace subsidies). Additionally, any employer (regardless of size) who self-insures their health plan must file Form 1095-B/1094-B or equivalent to report covered individuals. These reporting requirements help enforce the ACA’s rules and individual mandate compliance. States with their own health insurance mandates (like California, New Jersey, Massachusetts, etc.) may have additional reporting requirements to state agencies, but more on that in state-specific sections.
In summary, under federal law a company generally must have at least 50 full-time equivalent employees before it is required to offer health insurance to its staff.
This 50-FTE threshold is the key trigger for the ACA employer mandate. Companies below that size face no federal penalty for not providing health benefits. As we’ll see, most states follow this federal framework and do not add a separate employer coverage mandate on smaller businesses (the notable exception being Hawaii, and previously Massachusetts, which have their own rules). Now, let’s dive into Florida’s employer health insurance laws and then compare other major states.
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Todd Taylor with Taylor Benefits gives our small business the kind of personal service we need. Insurance benefits are important to our employees and Todd helps us find a balance between benefits and value. Todd responds immediately to my phone calls & e-mails. He has even gotten in touch with me on a Sunday when we were in need of coverage answers immediately. We are very pleased with the hands-on service Todd and his staff provide.”
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