ACA Compliance Requirements for Texas Employers

For Texas employers, Affordable Care Act compliance can affect employee eligibility, plan design, affordability, and annual reporting. ACA compliance requirements are still in effect, but the rules that apply can vary based on the employer and the health coverage offered.

What Is ACA Compliance?

ACA compliance refers to the steps employers must take to meet federal requirements under the Affordable Care Act. For some businesses, that includes offering qualifying health coverage to full-time employees, meeting affordability and minimum-value standards, tracking employee eligibility, and completing annual reporting. Other requirements can apply more broadly to employer-sponsored health plans.

Determining ACA obligations can require extra review when an employer has related businesses, a self-insured plan, or workers whose hours vary during the year. In those situations, benefits, legal, or tax guidance may be useful when applying the rules to a specific workforce and plan structure.

Which Employers Must Follow the ACA Employer Mandate?

The ACA employer mandate applies to applicable large employers, or ALEs. A business generally qualifies as an ALE if it averaged at least 50 full-time employees, including full-time equivalent employees, during the previous calendar year.

For ACA purposes, a full-time employee generally works at least 30 hours per week or 130 hours per month. Part-time employees can still affect ALE status because their hours are combined when calculating full-time equivalents. In general, employers total the monthly hours of non-full-time employees and divide by 120 to determine the number of full-time equivalents for that month. This means a company with fewer than 50 full-time employees may still reach the ALE threshold once part-time hours are included.

If a company has common ownership with one or more other businesses, federal controlled-group rules may require those businesses to be counted together when determining ALE status. Each company can fall below the threshold on its own while the combined group still qualifies as an ALE.

Employer Shared Responsibility Requirements

Applicable large employers are subject to the ACA’s employer shared responsibility provisions. In general, they must offer minimum essential coverage to at least 95% of full-time employees and their dependents or potentially face an employer shared responsibility payment.

Under these rules, dependents generally include an employee’s children through the end of the month in which they turn 26. Spouses are treated differently under the employer shared responsibility rules, so employers should not assume the same coverage requirement applies to every family member.

ACA plan coverage in Texas offered under the mandate must also be affordable and provide minimum value. Affordability focuses on the employee’s cost for qualifying self-only coverage, while minimum value generally means the plan pays at least 60% of expected allowed healthcare costs. Eligible employees generally cannot be required to wait more than 90 days before group health plan coverage begins, so enrollment procedures should reflect that limit.

How ACA Affordability Is Determined

For 2026 plan years, the ACA affordability percentage is 9.96%. The test generally looks at what an employee must pay for the lowest-cost self-only option that provides minimum value, including the employee’s share of the health insurance premium.

Employers usually do not know an employee’s household income, so the ACA allows safe harbors that can be used instead. The federal poverty line, rate-of-pay, and Form W-2 methods give employers different ways to test affordability using information they can reasonably access.

Because the affordability percentage can change each year, HR teams should verify the current figure and employee contribution amounts when preparing for a new plan year.

ACA Reporting Requirements for 2026

Applicable large employers generally must file Forms 1094-C and 1095-C with the IRS each year. Form 1095-C reports information about health coverage offered to full-time employees, while Form 1094-C serves as the employer’s transmittal form. Employers with self-insured coverage can have additional reporting responsibilities.

Preparing these forms depends on information collected throughout the year. Employers may need records showing full-time status, offers of coverage, employee contributions, and the months when coverage was available. Keeping employee-hours, eligibility, payroll, and benefits information aligned can make it easier to spot inconsistencies before filing.

Employers should also confirm current IRS filing and employee-furnishing deadlines for the 2026 reporting year rather than relying on dates from previous years.

ACA Compliance for Smaller Texas Employers

Businesses below the ALE threshold are generally not subject to the ACA employer shared responsibility mandate, but other ACA obligations can still apply. Group health plan rules may affect smaller employers, and businesses with self-insured coverage can have information-reporting responsibilities even when they are not ALEs.

How a plan is funded can change which responsibilities fall to the employer. With a fully insured plan, the insurance carrier handles some coverage-related reporting, while a self-insured employer may take on more direct reporting duties. Smaller Texas businesses still need to weigh plan design, premiums, participation requirements, and workforce needs when evaluating group health options.

Common ACA Compliance Risks

Employee classification can affect eligibility, coverage offers, and reporting. Seasonal schedules, fluctuating hours, and a mix of full-time and part-time workers can make accurate hour tracking particularly important.

An employee whose schedule changes throughout the year may cross the full-time threshold during certain measurement periods. If those hours are not tracked correctly, the employer could miss a required coverage offer or report the employee incorrectly. Controlled-group errors can create similar problems when related businesses are evaluated separately even though federal rules require them to be considered together.

Changes in premiums, employee contributions, or federal thresholds can affect whether coverage continues to meet ACA requirements. Late or inaccurate filings can lead to additional work and potential penalties. If an employer receives an IRS discrepancy or penalty notice, the employee and coverage records behind the notice should be reviewed promptly so the business can respond by the stated deadline.

Get Help with ACA Compliance

Selected Benefits can help Texas businesses compare group health insurance plans based on plan design, coverage, cost, and employee needs. Employers can review available options while considering the ACA requirements that apply to their workforce and benefits program.

Contact Selected Benefits to discuss group health insurance options and benefits strategies for your Texas business.