Health insurance can feel like a maze—especially for small employers trying to stay compliant with the Affordable Care Act (ACA). But good news: offering ACA-compliant coverage doesn’t have to be overwhelming.

Whether you have a handful of employees or you’re on the verge of becoming an Applicable Large Employer (ALE), this guide will help you understand what’s required and how to offer coverage that checks all the boxes—without breaking your budget.

 

First Things First: Do ACA Rules Apply to Your Business?

The ACA defines an Applicable Large Employer (ALE) as a business that has 50 or more full-time employees (or equivalents). If you’re under that threshold, you’re not legally required to offer health insurance—but offering coverage can still give you a competitive edge.

Even if you’re not an ALE, offering benefits helps:

  • Attract and retain top talent. 
  • Build company culture and employee loyalty. 
  • Reduce turnover and improve morale. 
  • Stay ahead of future growth and compliance needs. 

What Makes Health Coverage “ACA-Compliant”?

Whether you’re required to offer coverage or not, if you do offer it, the plan must meet two key ACA standards:

  1. Minimum Essential Coverage (MEC) – The plan must cover a core set of benefits. 
  2. Minimum Value (MV) – The plan must pay at least 60% of the total cost of benefits. 

In addition, the plan must be affordable, meaning the employee’s cost for self-only coverage doesn’t exceed a certain percentage of their income (9.12% for 2023, adjusted annually).

 

ACA Compliance Options for Small Employers

Here are a few common strategies small employers use to stay compliant (and cost-efficient):

1. Traditional Group Health Plans

Offer a small group plan through national carriers. This is the most familiar method but can be pricey and complex.

Pros:

  • Easy for employees to understand. 
  • Established network of doctors. 
  • One-size-fits-all (which can also be a con). 

Cons:

  • Premium costs keep rising. 
  • Less flexibility for remote or part-time employees. 

2. ICHRA (Individual Coverage HRA)

This growingly popular option allows small employers to reimburse employees for individual health insurance plans—tax-free.

Why it works for ACA compliance:

  • You set a defined monthly allowance. 
  • Employees buy ACA-compliant plans themselves. 
  • You meet the affordability and minimum value rules with proper setup. 

Bonus: It’s scalable for future growth and perfect for hybrid or remote teams.

3. QSEHRA (Qualified Small Employer HRA)

Specifically for businesses with fewer than 50 employees, QSEHRA lets you reimburse employees (tax-free) for premiums and medical expenses.

Key Notes:

  • Contribution limits apply (set by IRS annually). 
  • Great starter benefit if you’re new to offering insurance. 

ACA Reporting: What You Need to Know

Even if you’re under 50 employees, it’s a good idea to track your offerings and participation for future compliance. If you are an ALE, you’re required to file IRS Forms 1094-C and 1095-C annually to document your coverage offerings.

GoBenefits supports ACA reporting as part of our all-in-one platform, so your paperwork stays in order—and penalties stay off your radar.

 

Final Thoughts: Compliance Doesn’t Mean Complicated

As a small employer, offering ACA-compliant coverage can be a huge advantage—not a burden. With the right strategy, you can offer real value to your team without overextending your budget.

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