Colorado Home Care Agencies and the ACA Employer Mandate: Who Has to Offer Coverage

Is your agency an Applicable Large Employer?

Count full-time employees (30+ hours a week or 130+ a month) and add full-time equivalents from everyone else: total part-time hours in the month ÷ 120. Average the monthly totals over the prior calendar year.

Worked example. A Colorado agency has 40 caregivers and office staff at 130+ hours a month, plus 24 part-time caregivers averaging 50 hours a month.

• Full-time employees: 40
• Part-time FTEs: 24 × 50 = 1,200 hours ÷ 120 = 10
• Total: 50 → the agency is an ALE. Fifty is the threshold, not fifty-one.

Two home care specifics. Entities under common ownership are combined under the controlled-group rules, so multiple agency LLCs or franchise territories with the same owners count as one employer. And caregivers with variable hours can be classified using the IRS look-back measurement method (a 3–12 month measurement period followed by a stability period), which is how most agencies decide who must be offered coverage without re-running the math every month.

IRS, Identifying full-time employees ↗

What an ALE owes if it doesn't comply (2026 amounts)

• 4980H(a), no offer: if you don't offer minimum essential coverage to at least 95% of full-time employees and any one of them gets a subsidy on Connect for Health Colorado, you owe $3,340 per full-time employee minus the first 30. In the example above: (40 − 30) × $3,340 = $33,400 a year, triggered by a single subsidized caregiver.
• 4980H(b), unaffordable offer: if you offer coverage that's unaffordable or below minimum value, you owe $5,010 for each full-time employee who enrolls in a subsidized marketplace plan.

IRS Rev. Proc. 2025-26 ↗

Which Colorado caregivers can actually trigger a penalty

Penalties are only triggered when a full-time employee actually receives a premium tax credit on the marketplace. Who can get one depends on income:

Colorado expanded Medicaid (Health First Colorado); adults to 138% FPL qualify, reducing employer penalty exposure from the lowest-paid caregivers. kff.org ↗

Colorado runs its own exchange, Connect for Health Colorado, with standardized Colorado Option plans that must be offered by carriers. connectforhealthco.com ↗

What counts as "affordable" for a Colorado caregiver in 2026

Coverage is affordable if the caregiver's self-only contribution is no more than 9.96% of household income. Since you can't know household income, the IRS provides three safe harbors:

The Colorado-specific point: because the state minimum wage is $15.16, the rate-of-pay safe harbor gives Colorado agencies far more room than the $129.89 FPL figure most national guides quote. An agency paying $15.16 can charge up to $196.29 a month for self-only coverage and still be safe from the (b) penalty. Use each caregiver's actual lowest hourly rate; where local minimums are higher, the ceiling is higher still.

A CHOICE (formerly known as ICHRA) counts as an offer of coverage. It's affordable if the caregiver's cost for the lowest-cost self-only silver plan on Connect for Health Colorado for their rating area, minus your monthly allowance, stays within the 9.96% test.

IRS Rev. Proc. 2025-25 ↗ · IRS HRAs ↗ · minimum wage → see the Colorado wage & hour page

2026 federal compliance calendar (Colorado adds nothing to this list)

There is no Colorado filing, no Colorado furnishing deadline, and no Colorado penalty. If you also employ caregivers who live in California, New Jersey, Massachusetts, Rhode Island, or DC under a self-insured plan, those states' reporting rules may apply to those employees; see the state-by-state ACA hub.

IRS, Information reporting by ALEs ↗

Other Colorado mandates that touch home care agencies

These aren't ACA rules, but they land on the same desk.

• Colorado SecureSavings (5+). Employers with 5+ employees, in business 2+ years, must facilitate Colorado SecureSavings if they do not offer a retirement plan; all registration waves have passed, so compliance is ongoing for new agencies. coloradosecuresavings.com ↗
• FAMLI paid leave. Colorado FAMLI is funded by a 0.88% payroll premium in 2026 (reduced from 0.9%) split 50/50 between employer and employee (employers with fewer than 10 employees skip the employer share); benefits are up to 12 weeks (16 for pregnancy complications). famli.colorado.gov ↗

Frequently asked questions

We have 48 full-time caregivers and a handful of part-timers. Are we under the threshold?

Probably not. Add the part-timers' monthly hours and divide by 120. Two part-timers at 120 hours a month between them add one FTE, which puts you at 49; a third pushes you to 50 and ALE status the following year.

Does Colorado require us to file anything about health coverage with the state?

No. Colorado has no state individual mandate and no state 1095 reporting. Your only filing is federal (1094-C/1095-C) if you're an ALE.

Can a caregiver on Medicaid trigger a penalty against us?

No. Penalties are triggered only by full-time employees who receive a marketplace premium tax credit. Colorado caregivers below 138% FPL qualify for Medicaid instead, so they can't trigger 4980H. Caregivers between 138% and 400% FPL can.

We pay the Colorado minimum of $15.16. What's the most we can charge for self-only coverage?

Under the rate-of-pay safe harbor, $15.16 × 130 hours × 9.96% = $196.29 a month in 2026. That's well above the $129.89 FPL figure, so rate of pay is the better harbor for Colorado agencies.

Does a CHOICE (ICHRA) count as offering coverage in Colorado?

Yes. An affordable CHOICE (ICHRA) satisfies both the 4980H(a) offer requirement and the (b) affordability test, measured against the lowest-cost silver plan on Connect for Health Colorado for each caregiver's rating area.

We're under 50 FTEs. Is there any reason to offer coverage?

No mandate applies, but agencies under 50 commonly offer a MEC or CHOICE (ICHRA) to reduce turnover, and the same affordability math determines what you can charge caregivers.