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What Every Employer Needs to Know About the Health Care Employer Mandate
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Although the Patient Protection and Affordable Care Act — also known as Obamacare, PPACA and ACA — is law and many parts have gone into effect, many employers still have big questions about what they’re required to do. If you’re one of them, you may have pushed those questions aside in February after the U.S. Department of the Treasury pushed back the deadline to comply with the employer mandate to 2015. Now, 2015 is less than five months away and it’s time to start learning.
“The employer mandate is the provision in the ACA that requires an applicable large employer (at least 50 full-time employees, with “full time” generally meaning 30 hours a week with some some variations) to provide health insurance coverage which meets certain standards with regard to availability, value and affordability, or pay penalties for failing to do so,” says Gary J. Gunnett, director at Houston Harbaugh and head of its employee benefits plans practice area. “The provision generally becomes effective in January 2015, although employers in the 50- to 99-employee range get a break until January 2016.”
Which Companies Have to Offer Health Insurance?
That depends on the timing. In each employers’ 2015 plan year, companies with 100 or more employees must offer coverage to 70 percent of full-time employees. In the 2016 plan year, those with at least 50 full-time employees must offer coverage to 95 percent of full-time employees and their dependents.
“This portion of the ACA in particular has been very controversial due to the ambiguity in the language of the law regarding employer implementation,” says David Reischer, an attorney with LegalAdvice.com.
Because of the recent changes to shared responsibility it’s important to check on the latest information and consult with a knowledgeable benefits provider to ensure your organization is compliant.
What Can Companies with Fewer than 50 Employees Do?
Although they aren’t required to offer health insurance, businesses with fewer than 50 employees can choose to do so — and may want to so they can remain competitive in the race for top talent. Health insurance exchanges, known as the SHOP Marketplace, were set up so small employers can buy and offer employee health coverage.
The SHOP Marketplace offers four levels of coverage that can be started at any time. Employers are required to offer coverage to all full-time employees to take advantage of the SHOP Marketplace, and in many states, at least 70 percent of employees must enroll in the SHOP plan.
What are the Penalties for Noncompliance?
Penalties for employers with 100 or more full-time employees start in 2015. If an employer doesn’t offer coverage, or if the coverage it offers doesn’t provide “minimum value” or is not affordable, it could face non-deductible penalties of up to $3,000 per employee. Employers with 50 or fewer employees are not subject to penalties if they do not offer health insurance coverage.
“The value standard is met only if the health plan pays for at least 60 percent of the total costs of benefits provided under the plan,” Gunnett says. “The affordability standard is met only if the employee’s contribution for coverage is not more than 9.5 percent of household income.”
What Kind of Help is There?
If you offer health insurance through a SHOP Marketplace, you may be eligible for tax credits. Eligibility depends on how many employees you have (fewer than 25 full-time) and their salaries (an average of about $50,000 a year or less).
If you have more questions about the employer mandate, please contact us. Our team is happy to share its expertise.
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