Nonprofits, like all other employers in the United States, are affected by the Affordable Care Act (“ACA”). The size of a nonprofit’s workforce will determine which provisions of the ACA it must follow. In general it’s important to know whether or not your nonprofit has 50 or more “full-time equivalent employees [1],” as defined in the ACA.

• Read how the IRS defines “full-time” employee [2] for purposes of the ACA.  
• ACA Information Center [3]for applicable large employers (IRS)

Learn about the tax credit

Does your nonprofit pay for health insurance for its employees? If so, your nonprofit may be eligible for a special refund – called the “small business health care tax credit.” 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 can apply for a “small employer health care tax credit [4]” that can help pay for the cost of health insurance for employees. Since tax-exempt organizations do not pay income tax to the IRS, the "credit" is in the form of a refund on previously paid employee income tax withholdings.

Practice Pointers

The ACA requires almost all employers to provide notice [5] to their employees explaining available options for health insurance.

• Almost all nonprofits are covered by the exchange notice requirement, but 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 [5] explanation.
• The notice requirement applies to nonprofits with any number of employees, even if only one employee.
• Read what the notice should contain [6], and see sample notices in English and Spanish that you can share with your employees.  (Department of Labor)
  • Sample notice for employers that do NOT offer [7] a health insurance plan to employees. (DOL)
  • Sample notice for employers that offer a health plan  [8]for some or all employees. (DOL) 

Key ACA provisions

• For employers with MORE than 50 employees [9]
  • Large employers must report certain coverage details both to employees and to the IRS, using Form 1095-C [10].
  • FAQs for large employers [2] (50+ employees)
• For employers with fewer than 50 employees [11]
  • Employers use IRS Form 1095-B [12] to report coverage details to employees and to the IRS.
  • FAQs for small employers [2] about the "employer mandate" (IRS)
  • Access to the SHOP marketplace [13], state-by-state
• For employers with fewer than 25 employees [14]
  • Special rules apply to small nonprofits with fewer than 25 employees who pay health insurance premiums for their employees. Read about how your nonprofit may be eligible for the small business employee tax credit [4].

Resources for nonprofits on the ACA

• Full Time Equivalent Calculator [15](Healthcare.gov)
• SHOP Marketplace resources for small employers [16] (Healthcare.gov)
• How-to guides for employees about SHOP  [17] (Healthcare.gov)
• Handout: Key Provisions of the ACA for Small Businesses [18] - including nonprofits (Small Business Association)
• Small business health care tax credit [4]
• State by state [19] information about the ACA (US Department of Health and Human Services)
• The Health Insurance Marketplace Small Employer Contact Center phone number is: 1-800-706-7893 and 1-800-706-7915 (TTY). The hours of operation are Friday 9am-7pm Eastern.
• Share with your consumers and clients resources on how to report their health insurance on their tax return [20]s (CMA)