The employer mandate required by the Affordable Care Act (ACA), also widely known as the ObamaCare, is constituted by the law with the aim to improve healthcare services offered by companies in the US. However, it has been facing a substantial amount of criticism, like one that sees it as one of the ACA’s most anti-growth provisions. Since it was implemented, it has forced most American employers to provide government-approved health coverage to employees, or they will have to pay new federal taxes for non-compliance. Now, this is just general information about the ObamaCare employer requirements, and there is more to know about it. Here are some FAQs that you will find useful:
How Do The Obamacare Employer Requirements Work?
Under the health care reform, companies with a hundred full-time equivalent employees (FTEs) or more are required to insure at least 70 percent of such workers by 2015 and 95 percent by 2016, while smaller businesses having 50 to 99 FTEs are required to adhere to the rule by 2016. This mandate does not apply to commercial establishments having 49 or less FTEs.
Employers with less than 25 FTEs who are receiving an average annual wage of less than $50,000 are qualified for employer tax credits through the new law’s Small Business Health Options Program (SHOP) Marketplace, while those that have 10 or less FTEs who are receiving an average annual wage of less than $20,000 are qualified to receive full credit of up to 50 percent of their share of employer premiums. To be tax-credit eligible, an employer is required to contribute at least 50 percent of a benchmark premium or 50 percent of the total premium cost. The failure to provide coverage or the provision of one that is unaffordable or not offering minimum value will obligate an employer to make a per-month, per-employee Employer Shared Responsibility Payment, which will be imposed by the Internal Revenue Service (IRS). Take note that employers are not required to include such a payment when filing for their tax returns.
What Are Full-Time Equivalent Employees?
Simply put, the term “full-time equivalent” is equal to the total number of full-time employees added by the combined number of part-time employee hours divided by 30. For the ObamaCare’s requirement to insure employees, it is based upon data on FTEs, which includes part-time hours.
How Many Hours Are Considered Full-Time Under The ACA?
Under the ObamaCare, “full-time” is defined as working an average of 30 hours or more per week or 130 hours or more per month for the purpose of providing employees with health benefits. To be regarded as an FTE, an employee should also work more than 120 days in a given year.
How Many Hours Are Considered Part-Time Under The ACA?
Under the ObamaCare, “part-time” is defined as working an average of not more than 30 hours per week or not more than 130 hours per month for the purpose of providing employees with health benefits. To be considered as a part-time employee, one should not exceed 120 working days in a given year.
To avoid providing health benefits, some employers have opted to hire more part-time employees, as only FTEs need to be provided with such benefits under the new law.
What Is The Employer Mandate Fee Or The Employer Shared Responsibility Payment?
This fee is a per-employee, per-month fee for companies that are having more than 50 FTEs and are not offering health insurance to the required number of employees and dependents with ages up to 26. As previously mentioned, it will also be imposed if the company offers coverage that somehow does not offer minimum value or is not affordable to an employee.
How Much Is The Employer Shared Responsibility Fee?
Generally, the employer mandate fee is $2,000 a year per employee and is payable per month. If an employee has received cost assistance from the insurance marketplace, the fee will be $3,000 per employee. However, these amounts may vary because of some important details that can affect what the business would actually owe.
What Is Minimum Value?
Minimum value implies that a health plan should offer the minimum essential coverage and cost sharing based on the insurance marketplace’s Bronze plan and should have a minimum average cost sharing amount, which is an actuarial value of 60 percent. All types of coverage on the SHOP is minimum essential coverage, and the ACA recommends using the insurance marketplace programs to cover employees, which helps ensure that an employer’s plan complies with the law.
How Do I Know If My Coverage Provides Minimum Value?
When evaluating if a health insurance policy meets minimum value, check if its share of the total average costs of services being covered is at least 60 percent. If you buy a group plan through the SHOP, it normally qualifies as having minimum value.
What Can I Consider An Affordable Employee Health Insurance?
An affordable employee health insurance plan should entail a cost that is not more than 9.5 percent of his or her household income for employee-only coverage. As a safe harbor, companies can simply make sure that they adhere to this requirement.
How Do I Know If My Coverage Is Affordable?
Since typically you will not know your employees’ household income, you can generally avoid getting penalized of the employer mandate fee for a certain employee by making sure that his share of the premium for employee-only health insurance does not go over exceed 9.5 percent of his or her wage for the year that is reported on his or her W-2 form.
How Are The Obamacare Employer Requirements Affecting Businesses Of Today?
The ObamaCare employer requirements have already caused a lot of businesses to reduce work hours from FTEs with the purpose of giving them the part-time status. Though there is only a few companies in the US with more than 50 FTEs and do not provide health insurance, still a substantial number of Americans are finding their work hours reduced.