Under the Affordable Care Act, large employers must either offer “minimum essential coverage” that is “affordable” and that provides “minimum value” to their full-time employees and their dependents, or potentially make an employer shared responsibility payment to the IRS. The employer shared responsibility provisions are sometimes referred to as “the employer mandate” or “the pay or play provisions”.
If you are an employer who had less than 50 full-time employees, including full-time equivalent employees, on average during the prior calendar year (2015), you are not subject to the Affordable Care Act’s employer shared responsibility provision for the current calendar year (2016) nor the employer information reporting provisions for the current year.
Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates throughout the year. To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year, and divides that total number by 12.
Employers with 50 or fewer employees can purchase health insurance coverage for their employees through the Small Business Health Options Program – found at HealthCare.gov and often referred to as the SHOP marketplace. Employers that have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 may be eligible for the small business health care tax credit if they cover at least 50 percent of their full-time employees’ premium costs and generally if they purchase coverage through the SHOP marketplace.
Employers that provide self-insured health coverage must file an annual information return reporting certain information for individuals they cover. This requirement applies regardless of the size of the employer’s workforce. Self-insured employers with fewer than 50 full-time employees will need to provide the 2016 information return, Forms 1095-B, to their employees by March 31, 2017. The deadline for sending information Forms 1094-B and 1095-B to the IRS is May 31, or June 30 if filing electronically.
If you are a small employer (as defined above) and wish to offer health care to your employees or direct pay or reimburse the employees for their health care premiums, we strongly recommend that you first consult with a health care insurance professional and tax professional to make sure that you do not run afoul of the plethora of complex health care and tax laws. Penalties for non-compliance can be draconian.
If you want to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
