Am I required to provide health insurance coverage to my employees?

While no employer has to offer health insurance coverage, some larger businesses may have to make an Employer Shared Responsibility Payment. This could apply to employers of different sizes at different times.

Employee-BenefitsIf your business has:

  • Fewer than 50 employees, you’re not subject to the Employer Shared Responsibility parts of the law any year. You may use the SHOP Marketplace to offer coverage for your employees.
  •  At least 100 employees, starting in 2015, you must provide affordable healthcare coverage that provides minimum essential coverage to your full-time employees. If you don’t and at least one of your full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Exchanges, you may be subject to a penalty called an Employer Shared Responsibility Payment.
  • At least 50, but fewer than 100. You may qualify for transitional relief until 2016 (see below). At that time you must provide minimum essential coverage to your full-time employees or be subject to the employer shared responsibility payment.

In order to be eligible for transitional relief, an employer must certify that it meets the following conditions:

  • Employ on average at least 50 full-time employees, but fewer than 100 full-time employees during 2014.
  • Hasn’t reduced the size of its workforce or the overall hours of service of its employees unless there is a bona fide business reason.
  • Did not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014.

The Employer Shared Responsibility Payment is calculated using different methods and is either $2,000 or $3,000 per employee per year depending on the circumstance. You don’t have to make a payment on the first 30 full-time equivalent employees. Employer Shared Responsibility Payments are not tax deductible.

Only employers who have at least 50 full-time equivalent (FTE) employees (or a mixture of full-time and part-time employees that’s equal to at least 50 full-time employees) are subject to the Employer Shared Responsibility Payment. I can help you with these calculations.

When must my business report coverage?

The Affordable Care Act requires large employers (at least 50 employees) to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered.

Information reporting is voluntary for calendar year 2014. Beginning in 2016, a large employer must file information returns with the IRS and provide statements to employees that report information about its offer of health coverage to its full-time employees for calendar year 2015.

Even if your company qualifies for transitional relief until 2016 (see the left-side article Health Insurance – Am I required to provide coverage to my employees?), you’re still required to file informational returns with the IRS for calendar year 2015.

The large employer will be required to complete Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.