New Report Explains Health Care Law Penalties for Employers
Before you know it, the January 1, 2014 effective date for many of the controversial provisions of the Patient Protection and Affordable Care Act (the ACA) will arrive. A recent report issued by the Congressional Research Service (CRS) examines the payroll penalties employers may face for failing to provide health insurance coverage to employees. Click Here to see penalties.
New Report Explains Health Care Law Penalties for Employers
Before you know it, the effective date for many of the controversial provisions of the Patient Protection and Affordable Care Act (the ACA) will arrive. A recent report issued by the Congressional Research Service (CRS) examines the payroll penalties employers may face for failing to provide health insurance coverage to employees.
Background: The goal of the ACA is to provide affordable health care coverage for employees, as well as private individuals, by increasing access to health insurance plans, expanding the health insurance market and requiring creation of state-run health insurance exchanges.
To ensure that employers continue to provide some level of coverage, the ACA includes a provision for “shared responsibility” by employers. Although this shared responsibility provision doesn’t specifically mandate employers to offer insurance to employees, the ACA imposes penalties on large employers if at least one of their full-time employees obtains a premium credit through an exchange.
The CRS report notes there is a two-part calculation for determining liability under this provision:
- Is the firm a “large” employer subject to the penalty? Only a large employer that employed an average of at least 50 full-time equivalent employees (FTEs) is subject to penalties.
- Does the penalty apply to a worker at the company?
Because the treatment of part-time and seasonal workers differs under the two parts of this calculation, there is considerable confusion among policymakers and employers. For example, part-time employees are included in the calculation for determining if an employer has at least 50 FTEs, thus being treated as a large employer for this purpose. However, if the penalty is triggered, it actually only applies to full-time employees, who are defined as employees working at least 30 hours a week on average.
The CRS report discusses these definitions and the calculation of the employer penalties. Click here to read some of the highlights.
