Understanding ACA reporting for
School Districts

i. What is ACA?

The Affordable Care Act, in general, called ACA, is a law enacted by President Obama on March 23, 2010. Upon its implementation on January 1, 2014, the law required every individual to obtain adequate healthcare coverage or pay a penalty.

Additionally, under the ACA employer mandate, an employer with 50 or more full-time employees is treated as a large employer and is required to offer affordable healthcare coverage to their full-time employees to avoid penalties.

ii. What constitutes “minimum essential and affordable coverage?

If a school district is determined to be a “large employer” under the ACA. It must offer minimum essential coverage that is affordable to all its full-time employees and report that to the IRS.

The plans that qualify as ‘minimum essential coverage’ under the ACA include: employer-sponsored plans; coverage under government-sponsored plans; grandfathered health plans; plans in the individual market; and any other health benefits coverage, such as a state health benefits risk pools, as recognized by the Secretary of Health and Human Services.

Coverage is considered "affordable" if employee contributions for employee-only coverage do not exceed a certain percentage of an employee's household income ( 9.83% in 2021 and 9.61% in 2022).

i. ACA Mandate for all School Districts

With the full implementation of the Patient Protection and Affordable Care Act (ACA), the IRS released regulations that specifically apply to educational organizations like school districts.

Under this regulation, school districts with at least 50 full-time employees in any month of the calendar year are considered "large employers" and are subject to employee shared responsibilities.

In other words, any school district that qualifies as a large employer must provide "affordable health coverage" of "minimum value" to all "full-time employees" and their dependents. Failure to do so may result in “shared responsibility” monetary penalties.

ii. How should a school district determine whether it is a “large employer”?

An easy way for all school districts to determine if they are a “large employer” is to calculate the total hours worked by all employees for a year and determine if this is equal to or greater than the total hours of 50 full-time employees.

Note: An employee is considered to be full-time if they work for an average of at least 30 hours per week during a calendar month.

iii. Is a school district required by law to offer health insurance coverage to its Employees?

No. However, beginning in 2014, school districts qualified as large employers must offer minimum essential coverage to their full-time employees. Failure to do so will be subject to penalties if any of their full-time employees (or his or her dependent) qualifies for and uses a tax subsidy or credit to purchase coverage on a health care exchange.

iv. Identifying Full-Time Employees of School Districts

In general, the ACA defines a full-time employee as one who works 30 hours or more per week (or 130 hours per month on average) for a minimum of 120 days in a year.

However, for educational organizations like school districts, there is a special rule that includes breaks of at least four consecutive weeks, such as summer vacation.

As a result, school districts must either exclude summer vacation when calculating average hours or consider giving employees credit for hours worked during the break.

Any employee who works or is expected to work 30 hours or more per week for nine months during the school year is considered a full-time employee of a school district and must be offered affordable health insurance coverage.