Affordable Care Act Tax Provisions for Employers Kick in January 1st, 2015 – The First Few Things You Need to Know

Starting January 1st, 2015 employers that employ 50 or more full-time equivalent employees must offer affordable health coverage that provides minimum level of coverage to full-time employees (and their dependents). If the employer fails to satisfy the above requirements they will be subject to Employer Shared Responsibility payment.

The number of employees is based on the previous calendar year, so if the employer employed 50 or more full-time equivalent employees at the end of 2014, they are subject to the rule in 2015. To calculate the number of full-time equivalent employees, the employer must combine full-time and part time employees. For example: an employer that employs 40 full-time employees (employees employed 30 hours or more per week) and 20 employees employed 15 hour per week, that employer has the equivalent of 50 full-time employees.

The Shared Responsibility payments is a penalty imposed on the employer if they do not offer affordable health coverage that provides a minimum level of coverage to their employees. The Shared Responsibility payment can be as high as $2,000 per employee. The employer will need to file an annual information return to the IRS, Form 1094-C that will show whether they offer insurance, and, if so, information on the offered policies. Form 1094-C will be due February 29th, or March 31st if filed electronically, following the calendar year to which the information relates. The employer will also be required to file Form 1095-C, employee statement, to each employee. The form will be due to employees on January 31 following the calendar year to which the information relates.

Please note that the above information is a very brief summary of what is a rather complex set of provisions. If you need more information or have questions, please don’t hesitate to contact Maly Sevilla via Email or by calling 301-652-6700.