Your company, which employs 150 workers, has been informed that it may owe an employer shared responsibility payment for 2015. There are two employer shared responsibility penalties under the Patient Protection and Affordable Care Act (ACA) for large employers that either fail to offer their employees health coverage (Internal Revenue Code Sec. 4980H(a)), or who offer coverage but have employees who qualify for premium tax credit or cost-sharing reductions (Internal Revenue Code Sec. 4980H(b)). You know that both types of penalties have provisions tied to the employer’s number of full-time employees. Do all full-time employees have to be counted for purposes of the penalty?
No, under Internal Revenue Code Sec. 4980H(c)(2)(D), the number of employees employed full-time is generally reduced by 30 for purposes of calculating the payment for employers not offering coverage and for the overall limitation provisions of the calculation for employers offering coverage to employees who qualify for a tax credit or cost-sharing reduction.
The penalties were originally scheduled to begin in 2014, but they were delayed until 2015. However, because 2015 is the first year the penalties are being imposed, there is transitional relief. For 2015 only, the number of employees may be reduced by 80, instead of 30.
Source: Employee Benefits Management Newsletter, May 12, 2015.