February 11, 2014 Two Important Changes in the Final ACA Employer Shared Responsibility Regulations

Posted at 19:31h in Affordable Care Act, Client Memos by
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KEEPING YOU INFORMED…

Yesterday, the United States Treasury Department issued final regulations regarding the Affordable Care Act’s employer shared responsibility provisions.  We wanted to advise you about two important changes:

1.     The implementation of the shared responsibility provisions for employers with between 50 and 99 full-time and/or full-time equivalent employees has been delayed from 2015 to 2016.

2.     For the year 2015, employers with 100 or more full-time and/or full-time equivalent employees may be subject to the Section 4980H(a) monthly penalty if they fail to offer health insurance coverage to at least 70% of their full-time employees (previously 95%). Beginning in 2016, the standard will be 95%.  Employers with plan years commencing on a date other than January 1 may be subject to a penalty effective on the first day of the plan year beginning in 2015.

We are in the process of conducting a more detailed review of the 200+ pages of the final regulations and will soon issue a more detailed memo outlining how the final regulations differ from the proposed ones.  As always, we will continue to keep you updated on developments with the Affordable Care Act. 

THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW.  IT IS NOT TO BE REGARDED AS LEGAL ADVICE.  THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.

TAX ADVICE DISCLOSURE: THIS WRITTEN COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER.  THIS STATEMENT HAS BEEN PROVIDED PURSUANT TO U.S. TREASURY REGULATIONS GOVERNING TAX PRACTICE.

© Lamb & Barnosky, LLP 2014

1. In general, the employer shared responsibility provisions impose penalties on any employer with at least 50 full-time and/or full-time equivalent employees that failed to offer health insurance coverage to at least 95% of its full-time employees or failed to offer affordable coverage to one or more full-time employees.  Full-time employees are those who on average perform 30 or more hours of service each week. 

2. The Section 4980H(a) monthly penalty is:  $2,000 x (Total number of full-time employees – 30)