Beginning in 2015 applicable large employers must offer minimum essential coverage to all full-time employees and their dependents. Large employers who do not offer this coverage, or who offer coverage that is not affordable or of minimum value may face penalties.
If you are considered a large employer and the mandate does apply to your business, determine how you can remain compliant. Will you pay or play? Pay the penalties levied for not offering coverage to your full time employees or play and offer coverage to your full time employees?
Large employers must follow other rules as well, including the insurance reforms outlined above for small employers. Large employers also face expanded reporting requirements, including new requirements requiring them to file returns with the IRS each Jan. 31 starting in 2015 for employers with 100 or more full-time equivalent employees and January 31, 2016 for all employers with more than 50 full-time equivalent employees, with information on full-time employees and their dependents. And like all other employers, large employers will be required to notify employees of the existence of exchanges, along with information about how to access the exchanges.
What kind of health plans must be offered?
To fully avoid penalties, large employers must offer full-time employees and their dependents a health plan that's affordable and meets a minimum value standard. To be considered affordable, the employee's share of premiums for self-only coverage must not exceed 9.5% of their household income. To meet the minimum value standard, the plan must cover at least 60% of the total allowed cost of benefits expected to be incurred under the plan. Learn More
Which employees get coverage?
Coverage must be offered to full-time employees and their dependents. Employers do not have to pay for dependent coverage and employees may be required to contribute to the cost of coverage. Proposed IRS rules define a full-time employee as a person who averages 30 "hours of service" per week in a given month. Employers can use 130 hours per calendar month as the equivalent of 30 hours per week.
But if your full-time employees' hours vary from month to month, how do you assess their full-time status? To address this concern and give employers more flexibility, the IRS is giving large employers the option to determine each existing employee's full-time status by looking back at a measurement period of three to 12 months. Learn More
Large employers face two possible types of penalties:
1. If you do not offer any coverage or offer coverage to less than 70% of your full-time employees in 2015 and 95% of your full-time employee in 2016, and any full-time employee ues a tax credit to purchase insurance on an exchange, the employer is liable for a $2,000 annual penalty times the total number of full-time employees, minus your first 30 full-time employees.
2. If you do offer coverage but at least one full-time employee receives a premium tax credit to help pay for coverage on an exchange either because the employer-provided insurance is not affordable or fails to provide minimum value, you'll face a $3,000 penalty for every full-time employee an exchange certifies as eligible for a preimum tax credit. Learn more