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How will the Affordable Care Act impact nonprofit employers?

Many nonprofit staff and board members are wondering how the Affordable Care Act will affect the operations of nonprofits. The short answer is that nonprofits, like all other employers in the USA, will be affected - the number of employees your nonprofit employs will determine to what extent. Your state association of nonprofits may have helpful resources posted on its website or be offering special guidance programs in your state. The National Council of Nonprofits has posted Affordable Care Act FAQs and information the Small Employer Health Care Tax Credit (that applies to tax-exempt nonprofit employers.)

Almost all employers are now required to provide their employees with a notice explaining the options for health insurance now available. Read these FAQs on the Notice Requirement for more information. (Very small nonprofits that are not subject to the Fair Labor Standards Act, such as those with less than $500,000 in annual revenue, are not covered by this requirement - See Department of Labor explanation.)

Q: If we have part time employees do they count towards the "50" threshold?

A: There is a special way to calculate "full time equivalent" employees to determine whether your nonprofit must comply with the provisions for employers with 50+ employees. Background.

Read the key provisions for employers with 50 or more employees

(Source: IRS and Small Business Administration)

Read the key provisions for employers with fewer than 50 employees

(Source: HHS, IRS, and Small Business Administration)

Read the key provisions for employers with fewer than 25 employees

(Source: Small Business Administration and IRS)

  • The notice requirement described above applies to nonprofits with only 1 employee.
  • NOTE! If your nonprofit employs fewer than 25 employees, pays premiums for health insurance for its employees, and average wages for employees are less than $50K annually, the nonprofit may be eligible for the Small Employer Health Credit to help pay for the cost of health insurance for your staff. Since tax-exempt organizations do not pay income tax to the IRS, the "credit" is in the form of a refund on employee income tax withholdings. Read more about the Small Business Health Care Tax Credit.

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