Clearing Up Health Care Confusion

Under the Affordable Care Act, every employer has specific rules and responsibilities that apply to them. These rules are determined by the size of your business and the number of employees in your workforce, which may be defined as small, large, or part of a group. Starting in 2015, the structure of your company that was in place in 2014 will be used to determine what category they fall into.

If you are an employer with fifty or more full-time equivalent employees, you will be subject to the Employer Shared Responsibilities provisions, as well as a requirement of filing an annual information return about whether you offered health insurance to your employees and what policy you offered. A full time employee is who works at least 30 hours per week.

An employer with 50 or more full-time employees must provide health insurance to at least 95% of their full-time employees AND dependents up to age 26 or they will be fined. Employers with 100+ full-time equivalent employees (FTE) need to insure at least 70% of their FTEs this year and 95% by 2016.  FTE is calculated by averaging part-time and full-time hours worked.

Employers with less than 25 FTEs may qualify for tax credits if the average wage is less than $50,000.

These rules apply to all types of businesses, including government agencies such as federal, state, local and Indian tribal governments. 

The Affordable Care Act’s Employer Shared Responsibility Mandate make it incumbent upon large employers to offer health coverage that provides a minimum level of coverage to their FTEs and their dependents.

For those who do not comply with this rule, the fee is $2,000 per full-time employee, minus the first 30 FTEs.  For example, if you have 150 people and 80 are FTE and you don’t comply, the fee would be $100,000 (80 FTE – 30 –excluded = 50 employees x $2,000 per= $100,000)

The fee is triggered if at least 1 employee shops on the marketplace and is eligible for a federal subsidy. Remember, the health insurance offered by the employer must be considered affordable (can’t cost more than 9.5% of the employee’s household income) and provide minimum value (have an average cost sharing of 60%). These rules only apply to the employees, not their dependents. If they choose the shop the marketplace, there is no fine.

Those businesses that sponsor self-insured group health plans are required to provide the same information about the health insurance options that they offer their employees whether they are defined as a large employer or not.

Actually, approximately 96% of employers are small businesses and have fewer than 50 FTE employees and so are exempt for the employer mandate. Of those that do have to comply, only a small amount are NOT offering qualifying coverage.

Those who are seeking more information about the IRS requirements for employer shared responsibility can find it on the IRS web site, http://www.irs.gov/Affordable-Care-Act

Questions about how the Affordable Care Act affects your business? Call us today at (813) 600 3199 to discuss your situation.