By Ruth Masterson, ASF
Do foundations that employ staff need to do anything in response to the new Affordable Care Act (ACA)? Yes! All private foundations (whether family, independent, corporate, company, operating, grantmaking, trust, or corporation) are included with other nonprofits under this law.
All employers must notify employees about the change in law. You should have done this by October 1, 2013—so if you haven’t yet, be sure to act now.
Three other points about the ACA to keep in mind:
- Employers that already purchase health insurance may continue with existing coverage.
- The ACA does not require employers to provide health benefits, but it does impose a penalty on employers with 50 or more full-time employees that don’t.
- Individuals can purchase their own health insurance using their state’s SHOP (Small Business Health Options Program) Marketplace.
Let’s take a look at how the ACA affects small employers:
Employers with fewer than 50 employees are eligible to purchase health insurance for employees through their state’s SHOP Marketplace.
SHOP is a program that allows employers with fewer than 50 full-time employees to purchase health insurance through “marketplaces” (formerly known as “exchanges”). These marketplaces are operated at the state level; each state can set up its own, or defer to the one set up by the U.S. Department of Health and Human Services.
Through SHOP, the employer can decide how much it wants to contribute toward premiums; employees’ share of the premiums can be collected through payroll deductions; contributions can be made pre-tax; and the employer can enroll and start coverage at any time.
Nonprofit employers with fewer than 25 employees also qualify for a quarterly tax refund called a Small Business Health Care Tax Credit. Right now, the refund is 25% of expenses paid by the employer toward employee health insurance; starting in 2014, it goes up to 35% (50% for for-profit employers). Employers can get this credit/refund retroactively, back to 2010, at the 25% level.
Some new rules vary by state, and you’ll need to find out how those rules affect you. Your state’s nonprofit association can help, for the 36 states with these associations, or you can contact your attorney or another knowledgeable advisor to learn what you need to know.
Additional Resources
How will the Affordable Care Act impact nonprofit employers?
The ACA and Charitable Nonprofits – FAQs
SBA.gov: Employers With Fewer Than 25 Employees
Kaiser Family Foundation FAQs on Marketplace Eligibility, Enrollments Periods, Plans and Premiums
ASF Senior Program Manager Ruth Masterson works closely with members to create written materials and training curricula, and answers member questions on foundation administration, governance, boards, and tax and legal topics. She is also is the project manager for ASF’s Practical Board Self-Assessment. Prior to joining ASF, Ruth served nonprofits in her work at Adler & Colvin, the Council on Foundations, and the International Center for Not-for-Profit Law.
