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Affordable Care Act: Excise Tax Penalties for Large Employers

Posted by McDonald & Osborne Posted on Oct 14 2015

As you may now be aware, the requirements stemming from the Affordable Care Act (ACA) for large employers to provide health insurance to their employees have been delayed for one year – now effective beginning after December 31, 2014. The requirements will call for employers with 50 or more full-time employees to either offer health insurance meeting “minimum essential coverage” or pay a tax equal to $2,000 annually for each full-time employee in excess of 30 employees. The $2,000 annual tax equates to $166.67 per month per employee – pretty hefty penalty if you ask me (and probably any such business owner). We typically think of a full-time employee as one who works approximately 40 hours per week. That definition has changed for purposes of the ACA to now include all employees who work in excess of only 30 hours per week. Also keep in mind that the hours of part-time employees are aggregated and counted as full-time employee equivalents in terms of calculating whether or not an employer does in fact have 50 or more employees. In other words, an employer with 40 traditional full-time employees and 15 part-timers may in fact be considered to employ 50 full-time employees, depending on the hours part-timers work. To complicate matters, employers will not be subject to a penalty if in the prior calendar year the employer’s workforce exceeded 50 full-time employees for 120 or fewer days, and the excess employees during that 120 day (max) period were seasonal workers.

Have I confused you yet? Luckily the Kaiser Family Foundation has provided a flow-chart we find to be very beneficial for those who are still unsure as to whether or not their business will be subjected to these new penalties in 2015. Check it out here . We will continually monitor any changes that may take place in connection with the new health care law as we strive to keep you informed. If you have any questions, please do not hesitate to give us a call.

Stephen Osborne
Accountant
sosborne@mo-cpa.com

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