The Internal Revenue Service has issued proposed regulations on the shared responsibility for large employers to provide health care coverage under the Affordable Care Act.
The IRS noted that employers may rely on the proposed regulations for guidance until final regulations are issued. In addition, the IRS posted a questions and answers document on its Web site Friday to explain the Employer Shared Responsibility provisions under the Affordable Care Act and the new proposed regulations.
Under the provisions, if employers do not offer affordable health coverage that provides a minimum level of health insurance coverage to their full-time employees, they may be subject to an Employer Shared Responsibility payment if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges.
Businesses that do not provide health insurance coverage may be subject to a penalty of $2,000 per employee per year if over 30 employees are subsidized by the tax credits. Employers need to provide "affordable" coverage that does not cost a single employee over 9.5 percent of their income, although the amount may be more for family coverage.
In order to be subject to the provisions, an employer must have at least 50 full-time employees, or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees). A full-time employee is considered to be an individual employed on average at least 30 hours per week. Half-time would be 15 hours per week.
The Employer Shared Responsibility provisions generally go into effect on Jan. 1, 2014, but employers will need to use information about workers they employ during 2013 to determine whether they have enough employees to be subject to the new provisions in 2014.
In 2014, if an employer meets the 50 full-time employee threshold, the employer generally will be liable for an Employer Shared Responsibility payment only if: (a) The employer does not offer health coverage or offers coverage to less than 95 percent of its full-time employees, and at least one of the full-time employees receives a premium tax credit to help pay for coverage on an insurance exchange; or (b) the employer offers health coverage to at least 95 percent of its full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an insurance exchange, which may occur because the employer did not offer coverage to that employee or because the coverage the employer offered that employee was either unaffordable to the employee or did not provide minimum value.
After 2014, the rule in part (a) applies to employers that do not offer health coverage or that offer coverage to less than 95 percent of their full time employees and the dependents of those employees.
A public hearing will be held on the proposed regulations on April 23 and is accepting written or electronic comments until March 18.
5 Comments
Thank you for covering the main aspects, Michael. I would just like to add that the proposed reliance regulations also provide certain relief to employers who inadvertently miss some employees. Additionally, there are several transition rules that employers should know about (more on these here: http://www.prestinaegele.com/new-irs-guidance-on-health-care-employer-mandate-looks-to-2014-start-date).
Posted by: AndrewWayne | February 28, 2013 4:52 AM
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Drcarroll.. you post above is crazy.. I want to know how you think you can buy health insurance "when it makes economic sense".. are you really that dumb... do you really think you are going to know when it makes sense to purchase the insurance?... hello..??... I guess you have one of those crystal balls and you know when you are going to be in a car accident or some other type of accident that involves needing medical costs so you are going to buy it just right before that event.. Man.. your a wizard.... Would be great to be you... I also like how you have such keen insight into the history of health care at such a ripe age of 34.. I guess with that crystal ball you can go back in time for all that insight... stick around for another 10 years before you open your trap... moron..
Posted by: jay1995 | January 2, 2013 2:17 PM
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DRCARROLL, Welcome to Socialized America, were you are covered for what the state deems is necessary to cover. When the rich can't pay more the middle class will, and get ready to stand in line for that next test, procedure, anything the can connect to a medical condition. Happy 2013 Comrad. By the way, drop that gun...
Posted by: MJGCPA | January 1, 2013 7:14 PM
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In what world is paying 9.5% of your income for a single service considered 'affordable'? I'm 34 years old, I use maybe $500 in medical care annually (that would be a big year). Why would I pay $10,000/year to subsidize someone else to live int he doctor's office when they aren't visiting their local McDonald's? Even if my employer subsidized that down to $5,000, or $2,000 -- they still wouldn't be subsiding me, they'd be subsidizing by subsidy of someone else.
The health care crisis was always an over-blown joke. Most of the uninsured were so by choice, and the largest group of those without insurance were solidly middle-class (earning more than $75k per year), but were making an economic decision that made sense for them.
If the government wanted to fix the issue of uninsured people seeking emergency care and then sticking the hospitals with the unpaid bills, they should have just made medical bills non-dischargable in bankruptcy, like student loans. For my part, I will buy health insurance when it makes economic sense for me to do so, not because the government wants me to defer the cost of the boomers and the fat asses.
Posted by: drcarroll | December 31, 2012 3:03 PM
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You can bet that if an employer has 51 full timers and doesn't offer health care 2 people are going to get laid off
Posted by: Unknown | December 31, 2012 12:03 PM
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