The analysis below provides a basic overview of requirements for all large employers.  After that analysis, you will be able to review some of your options whether you currently provide coverage to your employees or do not.  The rules are somewhat different for existing health plans as compared with new plans that would be considered ACA-compliant.

General Requirements

Though loosely called an “employer mandate,” as a large employer, you are not required to provide health coverage to your full-time employees.  By simply offering ACA-complaint coverage to all of your full-time employees and dependent children, regardless of whether or not your employee accepts that offer, you are meeting your requirements under the law and will not be subject to tax penalties.

How Penalties are Triggered

The circumstance under which a large employer would become subject to an ACA tax liability is a multi-step process.  To be penalized, an employer must first:

• Fail to offer coverage to all of its full-time employees and dependent children, OR
• Fail to offer “affordable coverage” (9.5% of household income) that is of “minimum value” to its full-time employees (NOTE: affordability does not apply to offer of dependent coverage)

Next, an employee must: 1) go to a state-based Exchange, 2) purchase coverage, AND, 3) receive a tax credit or subsidy for doing so.  It is important to note that not all of your employees will be eligible for the individual tax credit to purchase coverage in the Exchange.  To be eligible for a tax credit, an employee must:

• Not currently be enrolled in an employer-sponsored plan
• Not be eligible for Medicaid (under 100% of federal poverty level in some states, 138% in others)
• Have a household income of between 100% and 400% of federal poverty level

Only when all of the conditions above are met would a large employer be subject to tax penalties under the ACA.

Penalties for Failing to Offer Coverage
OR Offering Unaffordable Coverage

If just one of your employees purchases coverage in a state-based Exchange and receives a tax credit or subsidy for doing so, and you fail to offer coverage or fail to offer coverage deemed affordable and of minimum value, you become subject to one of two penalties.  Large employers cannot be liable for both penalties at the same time:

• $2,000 x the total number of full-time employees
• Employers who do not offer coverage may subtract the first 30 workers when calculating their tax liability.  Only one 30 worker subtraction is available for each group of corporations under common control.

• The lesser of $3,000 x the number of full-time employees receiving a premium assistance tax credit, or
• $2,000 x the total number of full-time employees
• Liability cannot exceed employer’s potential liability under the “A” penalty

NEXT STEP: Do You Currently Offer Health Coverage?

The penalties for failing to offer ACA-compliant coverage apply to all large employers whether they currently provide coverage or not.  However, the rules and business considerations for large employers that currently provide health coverage and those that do not are different.  This Planning Tool is designed with both types of large floral industry employers in mind.

YES. If your business currently provides some health coverage to your employees, please follow the guidance for “Large Employer Currently Offering Coverage”.

NO. If your business does not currently provide health coverage to your employees, please follow the guidance for “Large Employer Not Offering Coverage”.

DISCLAIMER: SAF is not providing legal, tax, accounting or health benefits advice.  The SAF Health Care Resource Center is a member benefit, provided for informational purposes only.  Please consult with a qualified professional for appropriate advice.

Keywords: insurance, health insurance, health care reform resources