Small Employers

Under the Affordable Care Act, an employer with 50 or less full-time equivalent employees is considered a small employer. A small employer with less than 50 full-time employees is not subject to the Employer Shared Responsibility mandate and is not required to provide health insurance coverage to its full-time employees.

A small employer in a state that has a Federally Facilitated Marketplace (FFM) will use the definition of full-time employee in the FFM which is an employee who works an average of 30 hours of service per week (or an average of 130 hours of service per month).  A small employer in a state with a state-based Marketplace will need to check with the Marketplace for the definition of full-time employee.

Small tribal employers may be eligible to participate in the Small Business Health Options Program (SHOP).  In most cases, a small tribal employer will not be eligible for the Small Business Health Care Tax Credit; however, tribal non-profit organizations may be eligible.

An employer with exactly 50 full-time employees or more is subject to the Employer Shared Responsibility Mandate.


What is considered a small business?

Employers with 50 or fewer employees are considered a “small business.” . Contact your State Department of Insurance to find out whether this applies in your state.

Can I get tax credits for providing insurance to my employees?

Tribal governments and other tribal businesses are not eligible for the small business health care tax credit; however, a tribal government non-profit organization that meets the below requirements may qualify for the small business health care tax credit.

A tribal government non-profit organization and other small employers may qualify for the tax credit if the employer has fewer than 25 employees, pays an average annual wage below $50,000, and provides health insurance, may qualify for a small business health care tax credit of up to 50% (up to 35% for non-profits) to offset the cost of insurance. This will reduce the cost of providing insurance.


Do I have to provide health insurance to my employees?

The Affordable Care Act does not require small employers (fewer than 50 full-time and/or full-time equivalent employees) to provide health insurance to their full-time employees.

The employer shared responsibility mandate under the Affordable Care Act applies to businesses with 50 or more full-time employees.

What should I know when I am looking for health insurance for my employees?

If you are a small employer with 2-50 employees, health insurance companies cannot turn your business down based on the health status of your employees or their family members. This rule applies when you initially apply for small employer coverage and if you decide to change plans.

An insurer must also accept everyone in your group. Employees or family members (if you offer dependent coverage) with health conditions cannot be excluded from coverage.

Health insurance companies must sell you any small employer health plan they sell to other small employers in your state.

Contact your State Department of Insurance to learn more about your rights to getting and keeping small employer coverage.

Will tribal employees or members be taxed for health benefits provided by my tribe?

Under the Affordable Care Act, health benefits provided or purchased by the Indian Health Service, tribes, or tribal organizations are excluded from gross income. Now tribes can purchase insurance without fearing that their members will have to pay taxes on those benefits.