ACA: Employer Mandate Provision
The Employer Mandate provision of the Affordable Care Act (ACA or Healthcare Reform) requires employers with an average of 50 or more full-time equivalent employees to offer health insurance to full-time employees or potentially pay a penalty.
How Will This Affect Your Business?
Large employers with 50 or more full-time equivalent (FTE) employees who do not offer at least 95% of full-time (FT) employees and their eligible dependents insurance providing minimum essential coverage (MEC) may be subject to a Shared Responsibility Assessment an annual penalty of $2,000 per employee for every FT employee, excluding the first 30 full-time employees (the first 80 employees are excluded in 2015), which are those defined as working at least 30 hours per week. This penalty will be imposed if one full-time employee purchases coverage on a government Exchange and receives a federal premium subsidy.
- Employers with 50 to 99 full-time or full-time equivalent employees: The requirement won’t be enforced until plan years with effective dates on or after January 1, 2016, if certain conditions are met.
- Employers with 100 or more full-time or full-time equivalent employees: These employers will need to offer minimal essential coverage (MEC) to at least 70% of full-time employees in 2015 and at least 95% in 2016 and beyond for the penalty not to be triggered.
Large employers, with 50 or more FTEs, who offer health coverage that is deemed “unaffordable” or that does not provide “minimum value” may incur a different penalty. This penalty of $3,000 will be applied for each FT employee who purchases coverage through a government Exchange and receives a federal premium subsidy. There are several methods for determining whether coverage is considered affordable; for most employers, coverage will be considered affordable if the cost of employee-only coverage does not exceed 9.5% of the employee’s W-2 income. A plan is deemed to provide “minimum value” if the percentage of allowed costs expected to be paid by the plan (as opposed to by the employee), also referred to as “actuarial value,” is at least 60%. Please note: Penalties are not tax deductible. This is effective in 2015 and there is no transitional relief for this part of the mandate.
How Can Oasis Outsourcing Help?
Oasis Outsourcing, one of the nation’s largest Professional Employer Organizations (PEOs), has expertise in all areas of Healthcare Reform and can help your business navigate through the various regulations. Specifically, Oasis can assist you in creating your strategy as well as determining your entire employee count. Interested in learning more? Contact Oasis Outsourcing at 866-AT-OASIS (866-286-2747) or Request a Consultation.