Impact on Large Employers
Effective January 1, 2015, Applicable Large Employers (ALEs) will be required to offer their employees affordable health insurance coverage that meet a minimum value standard or be subject to an Employer Shared Responsibility Payment (additional tax or penalty).
ALEs are also required to report information about the health care coverage offered to their full-time employees, if any, to the IRS and the employee in the form of an information return (Form 1095-C). The 2015 1095-C (Employer Provided Health Insurance Offer and Coverage) is required to be sent to the IRS by February 28, 2016 (March 31, 2016 if filed electronically) and to the employees by January 31, 2016.
For more information on the employer reporting requirements see the following on the IRS website:
An applicable large employer is a business that employs 50 or more full-time equivalent employees. The definition of the total full-time equivalent employees is based on a calculation that includes both full-time and part-time employees. An employee is considered full-time if they average at least 30 hours per week or 130 hours per month.
See What is a Full-Time Equivalent Employee? to determine how to arrive at the total number of full-time equivalent employees for a business for Affordable Care Act purposes.
Tax Penalties for Large Employers
For 2015, the IRS has provided transitional relief on the definition of an applicable large employer for purposes of the employer shared responsibility payment (additional tax or penalty). Under this provision, a large employer is a business that employed 100 or more full-time equivalent employees during 2014 as long as they meet the following conditions:
This transitional relief does not apply to the employer reporting requirements which defines a large business as 50 or more full-time equivalent employees.
A large employer will be subject to a penalty if any of its full-time employees receives a premium tax credit toward their State Exchange health insurance plan.
There are two situations in which a large employer will be subject to a penalty:
The affordability standard is not met if an employee’s required contribution for self-only coverage exceeds 9.5% of their income.
The minimum value standard is not met if the employer’s plan pays less than 60% of covered expenses.
The penalty is $3,000 for each full-time employee who opts out of the employer’s coverage because of not meeting one of the above standards and enrolls in a State Exchange to obtain their health insurance and is eligible for a premium tax credit.
See the IRS Questions and Answers on Employer Shared Responsibility Provisions on the IRS website for more information on the basics, which employers are subject to the provisions, full-time employees, making the payment, transitional relief for 2015, and additional information on the tax penalty for employers.
Other Employer Requirements under the Affordable Care Act
Read about other requirements for employers that offer health insurance coverage to their employees such as:
Small Business Health Care Tax Credit
Under the Affordable Care Act, qualified small employers may receive a credit to help offset the cost of the health insurance premiums they pay for their employees.
Details for Tax Years 2015 and later are as follows:
For more detailed information, see the Small Business Health Care Tax Credit for Small Employers page on the IRS website.Other Useful Links for More Information on the Affordable Care Act
2019 Federal Tax Changes
April 24, 2019
When a Rental Activity Can Be Included as Qualified Business Income
March 19, 2019
Safe Harbor Rule for Autos that Claim Bonus Depreciation
February 27, 2019
2018 Federal Return and Taxpayer Expectations
January 30, 2019
Reminder of 2018 Itemized Deduction Changes
January 16, 2019
Qualified Business Income Deduction (20% Deduction for Certain Pass-Through Income)
January 9, 2019