In 2013, the White House announced that the Employer Shared Responsibility provisions of the Affordable Care Act (ACA) would be postponed for one year. Now that the January 1, 2015 deadline has come and gone, Employer Shared Responsibility requirements are in effect.
Have you done everything required for ACA compliance? Here’s what you need to know:
Not all employers have to meet the Employer Shared Responsibility provisions.
Employer Shared Responsibility applies to all employers who employ at least 50 full-time employees or the equivalent in full- and part-time employment. For the purposes of the ACA, “full time” means 30 hours per week – not the 40 hours many employers are used to.
Subcontractors or independent contractors do not “count” as employees for ACA purposes, no matter how many hours per week they work. However, since the Department of Labor has begun scrutinizing the use of independent contractors more closely, now is a good time to make sure your independent contractors are meeting the definition of contractors – not employees.
Employers who don’t offer health insurance might face a penalty.
Employers who employ 50 or more full-time employees (or the equivalent) will likely face a “shared responsibility penalty” if they fail to offer health insurance to their employees. To avoid the penalty, employers will need to offer insurance coverage to 95 percent or more of their full-time employees (those working 30 hours per week or more). The insurance must meet the minimum requirements of the Affordable Care Act.
The “employer shared responsibility penalty” is a non-deductible excise tax that may be imposed as of January 1, 2015. Employers who do not offer minimum insurance coverage to all full-time employees, and who have at least one full-time employee who receives a tax credit for purchasing coverage through the insurance exchange, may be penalized.
Health insurance must be “affordable” and meet “minimum value.”
The health insurance offered to employees under the ACA must be both “affordable” for employees and meet “minimum value.” Insurance coverage is considered “affordable” if it costs the employee no more than 9.5 percent of their yearly wages. Insurance coverage offers “minimum value” if it pays for at least 60 percent of covered healthcare expenses.
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