If an Employer Has 50 or More FTEs, Does Coverage Have to be Offered to All Employees?
No. If an employer is subject to the employer-shared responsibility provisions, the employer must make an offer of coverage to at least 95% of its full-time employees and their dependents. Employers will be given a certain amount of room for error, in that they must offer coverage to at least 95% of full-time employees. If an employer meets the 95% threshold, the employer may avoid liability for a tax penalty if some of its employees do not have employer-sponsored coverage.
What Type of Coverage Must an Employer Provide?
Employers subject to employer-shared responsibility provisions must offer full-time employees affordable health coverage that provides a minimum value of coverage. Coverage offered to an employee’s dependents need not meet affordability thresholds.
How Will an Employer Know if Offered Coverage is Affordable?
An employee’s share of the premium for employer-sponsored coverage can be no more than 9.5% of the employees wages to be deemed affordable. If multiple coverage options are available to the employee, the affordability test will apply to the lowest-cost employee only option available to the employee.
How will an employer know if offered coverage provides minimum value?
A Final Rule was recently released that provides that an employer-sponsored plan provides minimum value if the percentage of total allowed costs of benefits provided is no less than 60%.
The Final Rule sets forth the following methodologies to determine if the Minimum Value (MV) criteria is satisfied:
- Click here to view the Minimum Value Calculator
- Any safe harbor established by HHS and the IRS;
- Certification by an actuary, which is only available if the plan contains non-standard features that are not suitable for the MV calculator or safe harbor checklists. If this options is used, the determination must be made by a member of the American Academy of Actuaries; or
- Any plan in the small group market that meets any of the “metal levels” of coverage based on the MV Calculator.
Is There Any Transition Relief Available?
Transition relief is available to employers that offer health coverage on a fiscal year basis as of December 27, 2012.
In cases where employees are eligible to participate in a company’s plan under its terms as of December 27, 2012, whether or not they take the coverage, the employer will not be subject to a potential tax penalty payment until the first day of the fiscal plan year starting in 2014.
If the fiscal year plan was offered to at least one-third of the employer’s full- and part-time employees at the most recent open season, or the fiscal year plan covered at least one-quarter of the employer’s employees, then the employer also will not be subject to the tax penalty with respect to any of its full-time employees until the first day of the fiscal plan year starting in 2014, provided that those full-time employees are offered affordable coverage that provides minimum value no later than that first day.
- Start Preparing Now – 2013
- Who is Subject to Employer-Shared Responsibility Provisions?
- What if there are multiple companies with common ownership?
- Who Must an Applicable Large Employer Offer Health Benefits To?
- What Constitutes a Full-Time Employee under PPACA?
- What Constitutes a Part-Time Employee under PPACA?
- Per Diem or Non-Hourly Employees?
- How Does an Employer Calculate the Number of Full-Time Equivalent Employees?
- To Determine “Applicable Large Employer” an Employer Must:
- Are “Hours of Service” Computed Differently for Hourly and Non-Hourly Employees?
Reeva Simon Rivkin, RHU, HIP, President, Rivkin Insurance Services; CA LicOB12353
Rivkin Insurance Services is a full service insurance agency specializing in Employee Benefits, Medicare Supplements, Medicare Advantage, Medicare Part D, Long Term Care Insurance, and Individual Health Care Insurance. We are here to help!
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* The views expressed do not necessarily reflect the official policy, position, or opinions of Rivkin Insurance Services. This update is provided for informational purposes. Consult with a licensed accountant or attorney regarding any legal / tax matters discussed herein.