Health Care Reform Updates – What Employers Need to Know About the ACA

September 2, 2015

in Health Care Reform

Certain Provisions Apply Based on Workforce Size & Structure

The IRS is reminding employers that the size and structure of their workforce will help determine which parts of the Affordable Care Act (ACA) may apply to them. Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates during the year.

Employers With Fewer Than 50 Employees

The following ACA provisions are relevant for employers with fewer than 50 employees:

  • SHOP Marketplace Eligibility – Qualified employers with fewer than 50 full-time equivalent employees can purchase insurance through the Small Business Health Options Program (SHOP) Marketplace.
  • Information Reporting for Self-Insured Employers – All employers (regardless of size) that provide self-insured health coverage must file an annual return for individuals they cover, and provide a statement to responsible individuals. Such employers are required to report for the first time in early 2016 for calendar year 2015.
  • Small Business Tax Credits – In general, employers may be eligible for the small business health care tax credit if they:
    • Have fewer than 25 full-time equivalent employees with average annual wages of less than $50,800 for tax year 2014 and $51,600 for tax year 2015;
    • Cover at least 50% of employees’ premium costs; and
    • Purchase their coverage through the SHOP Marketplace (for tax years beginning in 2014 or later).
  • Employers with fewer than 50 full-time employees (including full-time equivalents) are not subject to the employer shared responsibility (“pay or play”) provisions.

Employers With 50 or More Employees

The following ACA provisions are relevant for employers with 50 or more employees:

  • SHOP Marketplace Eligibility – Employers with exactly 50 full-time equivalent employees can also purchase insurance through the SHOP Marketplace.
  • Information Reporting for Applicable Large Employers – Separate from the information reporting requirements applicable to self-insured employers of all sizes, “applicable large employers” (generally those with 50 or more full-time employees, including full-time equivalents) must file an annual return and provide a statement to each full-time employee about their compliance with pay or play. Such employers are required to report for the first time in early 2016 for calendar year 2015.
  • Pay or Play Penalties – In general, an applicable large employer will be subject to a penalty if the employer does not offer affordable coverage that provides “minimum value” to its full-time employees and their dependents, and one or more full-time employees receives a premium tax credit.
    • Various forms of transition relief are available for 2015, including for applicable large employers with fewer than 100 full-time employees (including full-time equivalents). Details on this relief are available in IRS Q&A #34.

For more information on these and other ACA tax provisions, visit IRS.gov/aca.

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