Affordable Health Care Act: Not Sure What to Do about the Employer Mandate Penalty? We Can Help
The Affordable Care Act has many moving parts, but the provision that continues to cause the most confusion for business owners and individuals alike is the Employer Shared Responsibility mandate (“pay or play”). Understanding how the employer mandate penalty affects your business is essential, but first, let’s take a deeper look at the provision.
Pay or Play Background
The employer mandate is a provision that requires companies with over 50 full-time equivalent employees to provide affordable health insurance that provides a minimum level of coverage to their employees or pay a penalty tax if any full-time employee is qualified to receive a premium tax credit for purchasing coverage.
There are two types of penalties for employers who fail to meet the employer mandate:
- A fine based on your total number of employees. If you offer coverage to less than 95 percent of your full-time employees and at least one full-time employee receives federal assistance. Or;
- A fine based on employees receiving a premium tax credit. If you do offer coverage to 95 percent or more of your full-time employees yet still have at least one full-time employee receiving federal assistance (a premium tax credit). Note: This penalty is annually adjusted for inflation.
Here is a guide to the Affordable Health Care Act’s pay or play provision, to help you understand the employer mandate penalty and calculate how your business should proceed.
The Employer Mandate Penalty
If your business is subject to the employer mandate provisions of the Affordable Health Care Act, you are responsible for:
- Providing detailed reporting to the IRS on how many full-time employees your business employs.
- Identifying every full-time and full-time equivalent employee as defined by law.
- Determining the coverage, if any, you offer to these full-time employees.
- Tracking employee changes that may put your business over the 50 full-time equivalent employee threshold.
- Analyzing current group coverage to determine if it meets affordability and quality standards outlined in the employer mandate provisions.
Important deadlines: January 31 is the deadline for employers to deliver Form 1095-C to employees. If you aren’t filing electronically, February 28 is the last day you can manually file Forms 1094-C and 1095-C with the IRS. The deadline to file Forms 1094-C and 1095-C with the IRS electronically is March 31.
On November 20, the IRS extended the deadline for Form 1095 (Individual Statement) to employees from January 31 to March 2nd. In the Notice, the IRS did not extend the due date for filing the 1094-C and 1095C forms with the IRS. Those are still February 28 (if filing by paper) or March 31 (if filing electronically)
Click here for a copy of the notice.
Get Help with Shop Benefits
Navigating the world of health insurance and the Affordable Health Care Act can be complicated – and Shop Benefits is here to help. Our dedicated agents are committed to making insurance easier and more accessible for businesses of all shapes and sizes.
At Shop Benefits, we won’t just give you the link; we’ll be there with a helping hand whenever you need it. We’ll work with you to determine if your business is an Applicable Large Employer, how many full-time employees you have based on legal definitions, and whether you are offering affordable and adequate coverage for employees.
If you have any questions about how Shop Benefits can help you act on the Affordable Care Act today, please feel free to contact us online or call (404) 256-2171 and ask for Al Schiebel to learn more about the quality, flexibility, choice, and value Shop Benefits can offer you.