Pay or Play Penalties Delayed

Yesterday the Treasury and IRS delayed the “pay or play penalties” for an additional year for businesses with 50-99 employees.  There is also a phase in period during 2015 in which large businesses (100+ employees) will avoid penalties if they cover at least 70% of their full-time employees versus the previous 95% safe harbor.

The final guidance also notes that employers with 50-99 FTEs will NOT automatically be issued relief for this penalty.   They will receive transitional relief if they certify that they meet the following three requirements:

1. Limited workforce size (50-99)

2. Didn’t eliminate or reduce their employee health coverage that was in effect as of February 9, 2014

3. They didn’t reduce their workforce or the hours of their employees as of February 9, 2014.
Click here for the Department of Treasury Release.

Click here to read an article from the Wall Street Journal and the Washington Post about the delay.

Additional information will follow.

Higher Insurance Costs

Organizations may face higher insurance costs if they have low enrollment, are not currently offering insurance and when the shared responsibility penalties exceed the cost of coverage.

Businesses have much to consider when it comes to Health Care Reform:

• Nondiscrimination: Does your health plan provide richer benefits to higher paid employees?
• Cadillac Plan Tax: Do you offer plans with premiums in excess of the Cadillac plan limits?
• Full Time Employee Employer Safe Harbor: Measuring hours to classify employees as either full or part time over the current period.

Eide Bailly encourages businesses to:
• Identify someone to monitor issues and the impacts of Health Care Reform.
• Follow what’s happening with the set-up and organization of the federal and state health care exchanges.
• Review your employee benefit plan design and possible options.

Eide Bailly’s Employer Health Reform Analytics can help you make an informed decision and our professionals can provide the tools and support to make the decision easier.

Health Care Reform Basics

As of January 1, 2014, the Patient Protection and Affordable Care Act will require all individuals in the United States to have some form of health insurance. Integral to this reform, is the creation of state, regional and federal health care Exchanges, where individuals can purchase a variety of affordable health insurance plans and, if they fall within certain income levels, receive government-subsidized premiums.

This Act affects all businesses; however, large employers with 50 or more full-time equivalent employees will be required to:

A. Provide affordable health insurance coverage for all full-time employees,
B. Elect not to provide health insurance coverage, pay defined penalties, and send employees to a state, regional or federal Exchange to purchase insurance, or
C. Develop a new hybrid plan.

Employers who elect not to provide health insurance coverage will be assessed a penalty of $2,000 annually per full-time employees, minus the first 30 full-time employees if at least one employee receives an Exchange subsidy. Additionally, if an employer’s coverage is deemed unaffordable, the employer will be fined $3,000 for that employee.