Healthcare Mandate: The Impact on Employers!
The U.S. Supreme Court has upheld, in a 5-4 decision, the healthcare reform law known as the Patient Protection and Affordable Care Act. The reasoning for the purpose of this article really doesn’t matter. What is of importance is the impact the decision will have on employers beginning January 1, 2014 and although the law doesn’t require employers to provide healthcare coverage, it imposes penalties for coverage that is deemed unaffordable.
More Specifically, employers with 50 or more full-time employees (30 hours or more per week) that don’t provide coverage will be assessed a penalty if just one of their employees receives a premium tax credit when buying insurance in a state-based “health insurance exchange.” The annual penalty equals $2,000 per full-time employee in excess of thirty workers. Do the math, if you have 55 full-time employees, and one receives the tax credit, the penalty would be $50,000.
Employers that do provide coverage could also face penalties if:
1. The coverage doesn’t provide at least 60% of the covered healthcare expenses; or
2. the premium for the coverage exceeds 9.5% of a employees income. In such an example the employee can choose to obtain coverage in an exchange and qualify for a tax credit.
For each worker receiving the credit, the employer will annually pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees.
In addition, employers that filed 250 or more 2011 W-2 forms must begin reporting the cost of employer-provided healthcare coverage on the forms beginning with the 2012 tax year. In 2014, employers with 200 or more employees must automatically enroll newly hired or newly eligible full-time employees into a default health plan that provides affordable coverage.
The above represents somewhat of a capsule outline of what employers can expect. For a more detailed explanation please discuss the matter with your insurance broker or healthcare provider.
