Before some of the Affordable Care Act employer and insurer reporting requirements go into effect, the IRS released guidance providing transitional relief until 2015. This includes the tax penalties for failure to provide the required health coverage to employees. The notice also encourages employers to voluntarily implement the ACA information reporting and get ready for the full application of the provisions next year. As a reminder, effective January 1, 2015, the employer shared responsibility requirements and penalties will be applied.
Last January, the Affordable Care Act requires employers with 50 or more full-time-equivalent employees to offer health coverage to full-time employees and their dependents; otherwise they will have to face tax penalties. This provision is known as the employer mandate or employer shared responsibility.
Moreover, small businesses with fewer than 50 full-time equivalent employees aren’t subject to obligations. For large businesses, offering minimal essential coverage to full-time employees and their child dependents is required. The coverage should be at least 60% of expected costs for an average person or family and is available to at least 95% of full-time employees or five of its full-time employees if that’s greater than 95%.
Employees may be eligible for premium subsidies if their income is 400 percent of the federal poverty level or less, if their employer-sponsored plan doesn’t cover at least 60% of the total expected medical costs of an average person, or if no employer-sponsored plan is available to them.
For more information on the employer shared responsibility payment, here are some helpful resources:
- IRS Notice 2011-36 for calculating the number of full-time equivalent employees.
- IRS Questions and Answers on Employer Shared Responsibility Provisions
- Final IRS regulations (Issued on February 2014)
Contact us today if you need further assistance in choosing health insurance plan for your business.