ACA & Health Benefits Compliance for Home Care Agencies in California

Exchange & state mandate. California runs Covered California, a state-based exchange with state premium subsidies, and has its own individual mandate penalty administered by the Franchise Tax Board. Source ↗

State 1095 reporting (FTB). Employers with self-insured plans (and insurers) must furnish coverage statements to California employees by January 31 and file 1095 data with the FTB by March 31 each year; the penalty is $50 per covered individual for failure to file. Source ↗

CalSavers auto-IRA (1+ employees). CalSavers applies to all employers with at least one W-2 employee that do not sponsor a retirement plan; the final registration deadline for employers with 1-4 employees was December 31, 2025, so every non-exempt home care agency should now be registered or offering its own plan. Source ↗

SDI + Paid Family Leave. California SDI/PFL is employee-funded through payroll withholding with no taxable wage ceiling (since 2024); PFL pays up to 8 weeks, and SB 951 raised wage replacement to 70-90% of wages for claims beginning 2025. Employers must withhold and remit through EDD payroll filings. Source ↗

Cal-COBRA. Cal-COBRA extends continuation coverage to employees of insured groups with 2-19 employees and adds coverage after federal COBRA, for up to 36 months total. Source ↗

ALE threshold & counting caregivers. The ACA employer mandate applies to Applicable Large Employers (ALEs) with 50+ full-time equivalent employees (30+ hrs/week or 130 hrs/month). Home care agencies with variable-hour caregivers can use the IRS look-back measurement method (3-12 month measurement period plus a stability period) to determine which caregivers must be treated as full-time and offered coverage. Source ↗

2026 employer mandate penalties. For 2026, the Section 4980H(a) penalty (no offer of minimum essential coverage to 95% of full-time staff) is $3,340 per full-time employee minus the first 30; the 4980H(b) penalty (coverage unaffordable or not minimum value) is $5,010 per full-time employee who gets subsidized exchange coverage (Rev. Proc. 2025-26). Source ↗

2026 affordability percentage. Coverage is affordable in 2026 if the employee's self-only contribution does not exceed 9.96% of household income (up from 9.02% in 2025), per Rev. Proc. 2025-25. Employers may use the W-2, rate-of-pay, or federal poverty line safe harbors in place of household income. Source ↗

2026 FPL safe harbor. A 2026 plan automatically satisfies the federal poverty line affordability safe harbor if the lowest-cost self-only contribution is no more than $129.89/month ($15,650 mainland FPL x 9.96% / 12). Alaska and Hawaii use higher FPL figures (about $162.26 and $149.31/month respectively). Source ↗

1095-C deadlines (2025 forms filed in 2026). ALEs must furnish Forms 1095-C to employees by March 2, 2026, or use the alternative method under the Paperwork Burden Reduction Act: post a clear website notice and furnish a copy within 30 days of request. E-filing of Forms 1094-C/1095-C with the IRS is due March 31, 2026, and e-filing is mandatory for employers filing 10 or more returns. Source ↗

ICHRA as a compliance option. An Individual Coverage HRA (ICHRA) lets agencies reimburse caregivers' individual-market premiums tax-free and counts as an offer of coverage under 4980H. An ICHRA is affordable if the employee's cost for the lowest-cost self-only silver plan, minus the HRA allowance, stays within the 9.96% affordability threshold; employee classes (e.g., field caregivers vs. office staff) can receive different allowances. Source ↗

Enhanced premium tax credits expired 12/31/2025. The ARPA/IRA enhanced premium tax credits expired December 31, 2025, restoring the 400% FPL subsidy cliff. KFF estimates average subsidized marketplace premium payments more than doubled (about +114%) for 2026, making employer-sponsored coverage and ICHRAs more attractive to caregivers - and increasing the chance that full-time employees seek subsidized exchange coverage that triggers 4980H penalties for non-offering agencies. Source ↗