equires employers with 100 or more employees to start in 2015. Those with 50 – 00 employees start in 2016. An “applicable large employer” is 50 or more full-time equivalents (FTE) for the preceding calendar year are liable for penalty for not offering basic health insurance to employees. Assessed if any full-time employee purchased health insurance through a state exchange & a subsidy or cost-sharing reduction is allowed to the employee for all of its full-time employees; or offers minimum essential coverage that is either:
Unaffordable to the employee or
Consists of a plan under which the plan's share of the total allowed costs of benefits fails the 60% test.
The penalty is $166.67 per employee per month ($2,000 per year).
Employers not offering coverage get pass on first 30 employees. Penalty is after 30.
Employers offering coverage with employees that qualify for assistance (can’t afford it) are penalized.
Unaffordable means employee has to pay more than 9.5% of household income.
Related employers are aggregated for the FTE calculation.
Full time means working 30 hours per week. The monthly equivalent of 130 hours.
To determine the applicable large employer for part-timers aggregate the number of hours worked per month & divide by 120. Add that to the full-time employees.
For salaried employees the IRS proposed 3 different methods to calculate FTE’s.
The penalty is an excise tax and is not deductible.
Employers are required to report coverage information to the IRS.
The penalty wil be adjusted for inflation going forward.
Employers will only be eligible for the Small Business Healthcare Tax Credit if coverage is purchased through the Small Business Health Options Program – SHOP – an insurance exchange for small business.