Cheryl Miles on February 25, 2015
Healthcare Reform in 2015: Employer Responsibilities
[cta id=”343″ align=”none”]Employers in the twenty-teens are dealing with some major changes set in place by the Patient Protection and Affordable Care Act (PPACA) of 2010. This massive healthcare reform has altered the way that employees receive healthcare, and it’s critical for employers to understand what these changes entail. Here are some of the main employer responsibilities associated with the reform so you can ensure that you remain compliant.
Employer Share Responsibility Provisions
As of January 1, 2015, any employer with 50 or more full-time employees will be responsible for offering employees the chance to enroll in an employer-sponsored healthcare plan or the employer may receive a penalty. The catch is that this doesn’t necessarily mean that there has to be 50 full-time employees. Instead, there can be a combination of full-time and part-time employees as long as the hours equal that of 50 full-time employees.
So for example, you could have two part-time employees whose combined hours are equivalent to a one full-time employee. If you are wondering what number of hours constitute as full-time, the IRS states that “a full-time employee is an individual employed on average at least 30 hours of service per week.”
Requirements for Large Employers
Businesses with more than 50 full-time employees are classified as a large employer. When they fall into this category, they must adhere to the PPACA’s guidelines or may be liable for an employer shared responsibility payment. However, smaller businesses with fewer than 50 full-time employees are not required to offer employer-sponsored health coverage. They are exempt and don’t have to worry about any backlash stemming from the PPACA.
According to the IRS, an employer can be penalized because of one of the following scenarios:
- They don’t offer health coverage or offer coverage to fewer than 95% of their full-time employees and the dependents of those employees, and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a marketplace.
- They offer health coverage to all or at least 95% of their full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on a marketplace.
In terms of specifics, a large employer that fails to offer health insurance coverage will be responsible for paying a $2,000 penalty each year for every full-time employee beyond the first 30 if they have one or more employees who receive subsidized coverage from the marketplace. In the event that en employer does offer insurance, they will be required to pay $3,000 annually for every full-time employee who is offered coverage, but receives a premium credit to buy insurance from the marketplace.
While the PPACA serves multiple purposes, one was to make it meet the increasing demands of employers wanting employer-sponsored health coverage. The problem is that all of the details can be difficult to understand, and some business owners may be unaware of their employer responsibilities. And although it won’t affect smaller business owners, it’s important to stay up-to-date on PPACA regulations and stay compliant.