Employer Responsibility: Offering Required Coverage
Posted on: July 31, 2014Categories: HR & Compliance
Large employers that do not offer affordable health coverage that provides minimum value to their full time employees may be penalized if any full time employee receives a subsidy through an exchange. Applicable employers include those with 50 or more full time employees, including full time equivalent employees (FTEs).
Sections of the healthcare reform law that detail employer penalty requirements are known as the “employer shared responsibility” provisions or the “pay or play” rules.
The provisions were supposed to take effect on January 1, 2014, however in July 2013 the Treasury announced they would be delayed for another year until 2015.
The Treasury released final regulations regarding the implement of the provisions in February 2014. The regulations included a transition to help employers comply with the regulations. It states that applicable large employers with 100 or more full time employees and FTEs must comply with the employer mandate rules in 2015. The medium sized employers will have an additional year and will not be subject to the new rules until 2016.
The size of the employer is based on the average size for the prior year. Part time employees are included, but aren’t required to be offered coverage. There are special rules for including other employees such as seasonal employees and volunteers as well.
The penalty amount for not providing coverage is $2,000 annually for each full-time employee excluding the first 30 employees. For companies with greater than 100 employees, the first 80 employees will be excluded in 2015. For 2015, the employer will not be liable for the penalty if 70 percent of employees are offered coverage. Then in 2016 and on, the employer will not be liable if 95 percent of employees are offered coverage.
The penalty for providing unaffordable coverage or coverage that does not meet the minimum value is $3,000 annually for each full time employee that receives tax credits with a maximum annual fine of $2,000 per full time employee. This also excludes the first 30 employees or 80 employees in 2015 for employers with 100 or more full time employees.
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