October 1, 2014
In just a few short months, the calendar will read 2015—the year in which the next phase of the Affordable Care Act, known as Obamacare, will kick in for businesses with 100 or more employees. Under the law, businesses with 100 or more employees on their payroll will need to start providing health benefits to at least 70 percent of their full-time workers in 2015, and to 95 percent by 2016. Companies that fail to meet these targets will be subject to penalties that start at $2,000 per employee. Businesses with 50 to 99 full-time employees will need to start insuring workers by 2016.
One area of these new regulations that business owners need to be clear about is the Obamacare definition of a full-time employee: 30 hours a week or more, versus the historic 40-hour week recognized by other federal and state laws. Obamacare also requires employers to collect signed waivers from employees who opt not to sign on to a company insurance plan. Even if an employer opts not to offer insurance, they are still required to file forms to substantiate the number of full-time and part-time workers they employ.
The required documentation means that businesses need to be prepared to monitor their employees’ hours—especially part-time employees—to make sure that they don't average more than 30 hours a week. Employers must also have a process in place for documenting that they have offered coverage to their full-time workers.
The penalties for non-compliance with the next phase of Obamacare may be significant, so it pays to prepare now. Companies with 100 or more employees that don't offer coverage may be liable for fines of $2,000 and $3,000 per worker next year. This penalty will apply for businesses with 50 or more employees in 2016.
Businesses that fall under the new mandate should also be aware that if any one of their employees receives a premium tax credit from the Obamacare insurance marketplace because the coverage they offer is deemed unaffordable or does not cover 60 percent of total costs, the employer must pay a Shared Responsibility Payment of either $3,000 for each employee getting a credit or $750 for each of their full-time employees, whichever is less. Under the Obamacare law, insurance is considered unaffordable if an employee's share of the premium costs for employee-only coverage (not the entire family) is more than 9.5 percent of their yearly household income.
It’s clear that the next phase of Obamacare brings with it some considerable new responsibilities for business owners. Adding preparation for these new mandates on to your year-end planning list will help you avoid penalties and start 2015 off right. If you have questions about Obamacare and how it will affect your business, please contact our firm for assistance.