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Healthcare
Large Employer calculation and penalties
The Federal Employer Mandate is applicable to employers who employ at least 50 full time equivalent (FTE) employees during the previous calendar year. Multi-unit operators and those places with common ownership that are otherwise related will be counted together under the IRS’ “common control standard”. Employers must offer “minimum essential coverage” to all full-time employees and their dependents. Full time employees are defined as a person who averages 30 hours per week in a given month.
In order to calculate the 50 FTE threshold, employers must look back at the previous 12 months to determine average number of FTE’s. To calculate the average number of FTE’s you must use the following formula for each month.
Step 1: For each of the 12 months an employer must look back and determine how many employees (including seasonal employees) averaged 130 hours or more in a calendar month. That will be the number of full-time employees you employed during that month.
Step 2: The employer must add together the hours of all other employees (including seasonal employees), but not count more than 120 hours per person. The total hours worked is then divided by 120. That determines a full-time-equivalent number for your non-full-time employees.
Step 3: The employer must add step 1 and step 2 together.
Step 4: Repeat the process for all 12 months of the calendar year. Add each of the 12 numbers together. Divide results by 12. If number is greater than 50 and employer is considered a large employer.
If an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal employees, the employer would not be an applicable large employer.
4980H(a) Penalty:
If no coverage is offered or if employer offers coverage to less than 95 percent of his or her full-time employees, and any full-time employee uses a tax credit to purchase insurance on an exchange, the employer is liable for a $2,000 annual penalty times the total number of full-time employees, minus your first 30 full-time employees.
4980H(b) Penalty:
If a large employer offers coverage to full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an exchange – either because the employer-provided insurance is not affordable or fails to provide “minimum value”. A $3,000 penalty for every full-time employee an exchange certifies as eligible for a premium tax credit to help them purchase insurance on an exchange. The payment is computed separately for each month. The amount of the payment for the month equals the number of full-time employees who receive a premium tax credit for the month multiplied by 1/12 of $3,000.
Exchange Notice
Under the National HealthCare Law, all employers are required to notify their employees about the existence of “marketplace exchanges”. This notification must be issued to all employees by October 1, 2013 and to new hires within 14 days of their start date. The MA Health Connector will serve as the exchange in Massachusetts.
The Health Connector also created an optional appendix to the Marketplace Notice that you can use to provide additional information to employees. This appendix is not required under the ACA but may prove helpful to employees.
Employers should consult with their insurance broker regarding plan eligibility and affordability for their employees.
Large Employer calculation and penalties
The Federal Employer Mandate is applicable to employers who employ at least 50 full time equivalent (FTE) employees during the previous calendar year. Multi-unit operators and those places with common ownership that are otherwise related will be counted together under the IRS’ “common control standard”. Employers must offer “minimum essential coverage” to all full-time employees and their dependents. Full time employees are defined as a person who averages 30 hours per week in a given month.
In order to calculate the 50 FTE threshold, employers must look back at the previous 12 months to determine average number of FTE’s. To calculate the average number of FTE’s you must use the following formula for each month.
Step 1: For each of the 12 months an employer must look back and determine how many employees (including seasonal employees) averaged 130 hours or more in a calendar month. That will be the number of full-time employees you employed during that month.
Step 2: The employer must add together the hours of all other employees (including seasonal employees), but not count more than 120 hours per person. The total hours worked is then divided by 120. That determines a full-time-equivalent number for your non-full-time employees.
Step 3: The employer must add step 1 and step 2 together.
Step 4: Repeat the process for all 12 months of the calendar year. Add each of the 12 numbers together. Divide results by 12. If number is greater than 50 and employer is considered a large employer.
If an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal employees, the employer would not be an applicable large employer.
4980H(a) Penalty:
If no coverage is offered or if employer offers coverage to less than 95 percent of his or her full-time employees, and any full-time employee uses a tax credit to purchase insurance on an exchange, the employer is liable for a $2,000 annual penalty times the total number of full-time employees, minus your first 30 full-time employees.
4980H(b) Penalty:
If a large employer offers coverage to full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an exchange – either because the employer-provided insurance is not affordable or fails to provide “minimum value”. A $3,000 penalty for every full-time employee an exchange certifies as eligible for a premium tax credit to help them purchase insurance on an exchange. The payment is computed separately for each month. The amount of the payment for the month equals the number of full-time employees who receive a premium tax credit for the month multiplied by 1/12 of $3,000.
Exchange Notice
Under the National HealthCare Law, all employers are required to notify their employees about the existence of “marketplace exchanges”. This notification must be issued to all employees by October 1, 2013 and to new hires within 14 days of their start date. The MA Health Connector will serve as the exchange in Massachusetts.
The Health Connector also created an optional appendix to the Marketplace Notice that you can use to provide additional information to employees. This appendix is not required under the ACA but may prove helpful to employees.
Employers should consult with their insurance broker regarding plan eligibility and affordability for their employees.
