The Affordable Care Act requires annual information reporting by applicable large employers relating to the health insurance that the employer offers (or does not offer) to its full-time employees, and employers have been given more time to comply with this mandate.
The Obama Administration and the Internal Revenue Service recently announced that large employers (those that have 50 or more full-time equivalent employees) will not be penalized next year if they do not provide workers with health insurance. The employer health insurance mandate will not be effective until Jan. 1, 2015, extended from the original Jan. 1, 2014, date.
This compliance relief is intended to provide additional time for employers to adapt their health coverage and to develop their systems for assembling and reporting the required information. In preparation for the 2015 effective date, once the information reporting rules have been issued, employers are encouraged to voluntarily comply with the information reporting provisions for 2014. Since the information reporting for 2014 is optional, no penalties are expected to be applied for failure to comply.
Beginning Jan. 1, 2015, large employers that do not offer affordable, minimum coverage and who have at least one full-time employee who receives a premium tax credit may face a tax of $2,000 per full-time employee, excluding the first 30 employees.
If a large employer offers coverage to full-time employees and their dependents, but the coverage is unaffordable to certain employees or does not provide minimum value and at least one full-time employee receives a premium tax credit, an employer will be required to pay a tax of: the lesser of $3,000 times the number of full-time employees receiving a premium assistance tax credit; or, $2,000 times the total number of full-time employees (excluding the first 30 employees from the assessment).
Under the Affordable Care Act, employers subject to the Fair Labor Standards Act were supposed to provide a notification to employees by Oct. 1, 2013, regarding the new healthcare exchanges. The Department of Labor has indicated that no fine or penalty will be assessed for failing to provide the notice.
These announcements currently do not affect other parts of the healthcare law. The exchanges were still scheduled to open on Oct. 1, and beginning Jan. 1, 2014, individuals will still be required to have coverage or pay a penalty, and insurers will be prohibited from denying health coverage to people with pre-existing conditions.
Kim Mahanna is a certified public accountant for Smith Schafer & Associates Ltd. Those who would like more information on this topic or who have tax and tax-planning questions may contact the Smith Schafer transportation team at (651) 770-8414 or [email protected].
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