Compensation Solutions Blog
Human Resources Outsourcing (HRO – PEO – ASO – Payroll – Agency)

Employer Shared Responsibility for Healthcare…a/k/a Play or Pay

Beginning January 2014, employers that generally employ 50 or more full-time or full-time employee equivalents will be subject to the Affordable Care Act provision known as Employer Shared Responsibility.  If an employer does not employ, on average, more than 50 full-time or full-time employee equivalents, then the employer is not subject, at this time, to the Employer Shared Responsibility provision.  Currently, full-time status is defined as an employee working, on average, 30 hours per week.  Employers can determine whether they meet the large employer threshold for January 1, 2014 by using applicable information from 2013.  Very important, if two or more companies have common ownership, then the companies will be combined for purposes of determining if they are subject to the Employer Shared Responsibility provision.  The aforementioned provision applies to all employers, including non-profits and government employers.

The above provision states that employers with 50 or more full-time employees or full-time equivalents must offer group health benefits to the employee and their dependents (not spouses) or pay a penalty.  Additionally, the provision states that the coverage must meet minimum essential benefits and also be affordable.  For the plan to be deemed affordable, the employee’s portion of the single premium cannot exceed 9.5% of the employee’s household income.  In order for the health plan to provide minimum value, the plan must cover at least 60% of the employee’s costs.

Penalties associated with the Employer Shared Responsibility provision are either $2000 or $3000 annually per full time employee.  The penalty amount depends on the circumstances as to whether the employer offers qualifying health coverage or not and whether the coverage is affordable.

There are many useful tools to help in understanding Healthcare Reform.  Feel free to view the tools provided by us or any other information provided by the various resources available.  For your convenience we have provided you with a link to a flowchart illustration of the Employer Shared Responsibility provision provided by the Kaiser Family Foundation.  All rights are reserved by the Kaiser Family Foundation.