Growing BusinessBENEFITS

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  • The Basics of the Affordable Care Act
    Game Plan

    If Your Business Has at Least 50 Full-Time/FTE Employees

    Be aware of Employer Shared Responsibility penalties. Employers of more than 50 full-time employees must offer affordable health insurance that provides reasonable value and coverage to employees and their families.

    Under the Act’s Employer Shared Responsibility (ESR) provisions, you may be required to pay a penalty of as much as $2,320 per full-time employee if at least one of your full-time employees (30 hours per week on average) is certified to receive a premium tax credit in an individual health insurance marketplace and you fail to offer what is called “minimum essential coverage” to all of your full-time employees and their children up to age 26.

    Even if you offer such “minimum essential coverage” to all full-time employees and their children, if that coverage is not affordable (generally less than 9.5% of the employee’s pre-tax wages) or does not provide “minimum value,” you could be liable for a $3,480 penalty if your employee goes to the marketplace and receives a premium tax credit.

    Follow new tax reporting rules. The Affordable Care Act imposes two tax-reporting requirements on employers:

    • Employers who sponsor self-insured major medical group health plans must report annually to both the IRS and their employees whether their employees were covered by “minimum essential coverage” for each calendar month in the preceding year. The information can be used by the IRS to enforce the individual mandate provisions of the Affordable Care Act.
    • Employers who are subject to the Employer Shared Responsibility provisions must provide information to the IRS and their employees regarding the health coverage offered to full-time employees. This information can be used by the IRS to enforce both the ESR and individual mandate provisions of the Affordable Care Act.

    Report health coverage costs on W-2s. If you issue 250 or more Forms W-2 during the previous calendar year, you must report the total annual cost of employer-provided coverage on each worker’s Form W-2 for the following year. (The amount reported is for information purposes only and doesn’t result in any additional tax liability for you or the employee.) This is required for most employer-sponsored health coverage, including group medical coverage.

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    Game Plan

    • Get more information on Employer Shared Responsibility in this PDF.
    • Get more information on the new tax reporting rules here.
    • Get more information on W-2 reporting here.