April 21, 2014

IRS: Final rules on Employer Shared Responsibility under the ACA

Brought to you by: Halsi Insurance Services
“PAY or Play”

On Feb. 10, 2014 the IRS issued final regulations on the Employer Shared Responsibility— commonly called the Employer Mandate or “Pay or Play” . The guidance provides important changes and transition rules that will be of value to many employers in complying with these requirements in 2015. What is the Employer Shared Responsibility? The shared responsibility requirement is one of the most significant provisions that employers need to address under the Affordable Care Act (ACA). Starting January 1, 2015, large employers must offer full-time employees health coverage that is affordable and provides minimum value or pay a penalty if at least one-full-time employee enrolls in marketplace coverage and receives a premium tax credit. Here are some things you need to know now to start developing a compliance strategy:

What is a “large” employer? Large employers with 50+ employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility “Pay or Play.”

What employers will owe an Employer Shared Responsibly payment (penalty)? A large employer who does not offer coverage or offers coverage to fewer than 95% of its full-time employees and the dependents of those employees, and at least on of the full-time em-ployees receives a premium tax credit to help pay coverage on a marketplace.

Is the coverage you offer affordable to your employees? If an employee’s share of the premium for employer-provided coverage would cost the employee more than 9.5% of that employee’s annual household income, the coverage is not considered affordable for that employee.

2015 Transition provisions? Although the mandate becomes effective in 2015, the final regulations exempt employers with 50 to 99 employees from their application until 2016. Thus, only employers with 100 or more employees are treated as “large employers” in 2015. The proposed regulations required large employers to offer coverage to at least 95% of their full-time employees in order to avoid a penalty. Under the final regulations, this requirement has been reduces to 70% for the 2015 play year, increasing back to 95% for the 2016 and later years. To learn more please Click Here.

Please note that the content in this publication is for informational purposes only and should not be construed as legal advice. For more information and details concerning the final rules on the Employer Shared Responsibility please contact Halsi Insurance Services. We can help you avoid those large penalties, and help you develop a compliance strategy today!