ACA and Health Benefits Rules for Home Care Agencies, by State

Which states add their own filing

Every other state: no state mandate, no state filing. Your only filing is federal (1094-C/1095-C) if you're an ALE.

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. Related 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.

Worked example. 45 caregivers and office staff at 130+ hours a month, plus 30 part-time caregivers averaging 60 hours a month: 45 full-time + (30 × 60 ÷ 120 = 15 FTEs) = 60 → ALE, even though only 45 people work full time.

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) instead of month-by-month; this is the method most agencies use to decide who must be offered coverage.

IRS, Identifying full-time employees ↗

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

• 4980H(a), no offer: $3,340 per full-time employee minus the first 30, triggered if coverage isn't offered to 95% of full-time employees and any one of them gets a marketplace subsidy. For the 45-full-time example: (45 − 30) × $3,340 = $50,100 a year.
• 4980H(b), unaffordable offer: $5,010 for each full-time employee who gets a subsidized marketplace plan because your offer was unaffordable or below minimum value.

IRS Rev. Proc. 2025-26 ↗

Who can trigger a penalty: the Medicaid-expansion effect

Penalties are triggered only by full-time employees who actually receive a premium tax credit. In the 40 expansion states plus DC, caregivers below 138% FPL (higher in DC, New York, Minnesota, and Oregon, which run state programs to ~200–215% FPL) qualify for Medicaid or a state program instead and cannot trigger a penalty. In the 10 non-expansion states (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, Wyoming), caregivers below 100% FPL fall into the coverage gap and also cannot trigger a penalty, while everyone from 100% to 400% FPL can. Above 400% FPL, credits are generally unavailable in 2026 now that the enhanced credits have expired.

What counts as "affordable" in 2026

Coverage is affordable if the employee's self-only contribution is no more than 9.96% of household income. Three safe harbors substitute for household income:

The crossover between the two fixed harbors is about $10.03 an hour: below it, FPL is the better harbor; above it, rate of pay gives more room. A CHOICE (formerly known as ICHRA) counts as an offer and is affordable if the lowest-cost self-only silver plan in the caregiver's rating area, minus your allowance, stays within 9.96%.

IRS Rev. Proc. 2025-25 ↗ · IRS HRAs ↗

2026 federal compliance calendar

State additions are listed in the table at the top of this page and on each state's page.

IRS, Information reporting by ALEs ↗

Every state at a glance

* Tiered, regional, or mid-year rate; see the state page for the detail. Rate-of-pay ceiling = minimum wage × 130 × 9.96%. "Credit-eligible from" is the household-income floor above which a full-time caregiver can receive a marketplace credit and therefore trigger a 4980H penalty.

Frequently asked questions

We operate in several states. Which state's rules apply to each caregiver?

Reporting rules follow the covered person's state of residence, not your headquarters. A Texas agency with New Jersey-resident caregivers on a self-insured plan owes New Jersey's filing for those caregivers.

Does a caregiver on Medicaid count against our 95% offer test?

The 95% test is about whether you offered coverage to full-time employees, not whether they took it. Medicaid-enrolled caregivers still count in the denominator, but they can't trigger a penalty because they don't receive a marketplace credit.

Is Hawaii really different?

Yes. The Prepaid Health Care Act requires coverage for employees working 20+ hours a week at employers of any size, with the employee share capped at 1.5% of wages. The ACA layers on top.

Where do the 2026 penalty amounts come from?

IRS Rev. Proc. 2025-26 set the 4980H(a) amount at $3,340 and the 4980H(b) amount at $5,010 for 2026; Rev. Proc. 2025-25 set the affordability percentage at 9.96%.