Ready for the Affordable Care Act?

Learn what nonprofits must do by October 1.

by Sarah Pack

iStock_000011137741XSmallWith over ten percent of workers in the U.S. employed by tax-exempt, nonprofit organizations, the implementation of the Affordable Care Act’s marketplace system will undoubtedly impact a great many organizations and their employees. Here is some key information to help you navigate the upcoming deadlines and intricacies of the law.

 Marketplace Coverage Notices

Beginning January 1, 2014, individuals and small businesses (including nonprofit organizations) with fewer than 50 employees will have access to health care coverage through a health insurance marketplace, which will allow consumers to compare benefits and prices to choose the plan that best fits their needs. Each state will have a marketplace, either run by the state itself, in conjunction with the U.S. Department of Health and Human Services (HHS), or entirely by HSS.

All employers[1] are required to provide notice of the marketplace coverage options by October 1, 2013 (the first day of marketplace open enrollment) to each full and part-time employee, regardless of whether the employer currently provides health care coverage to its employees. The Department of Labor has provided sample notices that employers may distribute directly to their employees or use as a model to create their own notices.

Small Business Health Options Programs

Small businesses employing fewer than 50 workers will be eligible to purchase health insurance for their employees through state-specific “SHOP” marketplaces that will allow such employers to offer a single plan for all employees; decide how much to contribute towards premiums; collect employees’ share of premiums through payroll deductions; make premium contributions with pre-tax dollars; and receive one monthly invoice. While coverage begins on January 1, 2014 for those individuals and small businesses who enroll via the marketplace on or after October 1, 2013, small business employers are eligible to enroll at any time throughout the year on a rolling monthly basis, allowing them to decide when to begin coverage.

Required Coverage

The Affordable Care Act does NOT require employers to provide health care coverage to their employees. However, effective as of January 2015, there is a penalty applicable to employers of 50 or more full-timeemployees who do not provide a minimum level of coverage to their full-time employees. There is no such penalty for not providing coverage to part-time employees.

Small Business Health Care Tax Credit

Beginning in 2010, small businesses that pay at least 50 percent of their employees’ health insurance costs and employ fewer than 25 full-time employees are eligible to receive a tax credit for premiums paid for employees’ health insurance. Tax-exempt nonprofit organizations receive this credit as a refund on quarterly payments made to the IRS for income tax or Medicare withholdings from employee wages. From 2010-2013, the refund amount is 25 percent of payments made by the employer towards employee premiums. As of January, 1, 2014, the refund will increase to 35 percent but will only be available to employers who purchase health care coverage through the marketplace. Please note, however, that the federal government sequestration has resulted in an 8.7 percent reduction of the refund rate for certain nonprofit employers.

For more information, you may contact the Health Insurance Marketplace Small Employer Contact Center at 1-800-706-7893 and 1-800-706-7915 (TTY) Monday through Friday from 9am to 5pm EST. Beginning October 1, the hours of operation continue until 7pm EST. If you have any questions regarding the implementation of the Affordable Care Act or would like assistance with complying with the marketplace coverage notice requirements detailed above, please contact us at

[1] While there are a few very narrow exceptions, we advise all nonprofit organizations to assume they are required to comply with the October 1 notice requirements.

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