Pay or Play – New Game Rules • March, 2014
Transition Relief for Groups of 100 or more:
Starting in 2015, employers
who had an average of 100 or more full-time equivalent employees during 2014 will need to
“pay or play” under Healthcare Reform. But for 2015, additional relief is being provided to
these companies, which may result in lower penalties or more time to comply with the “pay
or play” requirements.
But don’t forget the original rules…..this “transition relief” is only effective for a year,
then you’ll go back to the original rules. At least that’s what we know as of today….
In 2015, Who Needs to Pay or Play
Transition Relief
2015 is the first year companies with 100 or more full-time
equivalent employees will either have to provide health
coverage to their full-timers (play) or face tax penalties (pay).
Under this “full-time equivalent” averaging, you’ll need to
count all your full-timer’s as 1 employee, and all your parttimers as a fraction. GHB has a calculator to help you with
this averaging – contact us for our Excel tool.
These special 2015 provisions added to healthcare reform may
assist employers in either avoiding the tax or lowering their tax
burden for one year.
Who Counts in My Count
Your average number of full-time equivalent employees in a
given year will be based on your average count during the
prior calendar year. For 2015, you’ll be able to use either a 12
month average over 2014, or any 6 consecutive months. If just
one of these averages is below 100, you may be off the hook
for an additional year (see our Transition Relief article for
Groups of 50-99). For 2016, the only method you’ll be able to
use is your entire 12-month 2015 calendar year average.
A major point of contention has been the definition of “fulltime” employee. The original law set full-time status at either
30+ hours per week or 130+ hours per month. The transition
relief recently provided DID NOT change this definition.
However, a number of concessions WERE made. You don’t
have to include hours worked by bona fide volunteers or
federal/state work study students. And seasonal employees
were re-defined for 2015 as those working less than 6 months;
this will change again in 2016 back to “those working less than
120 days”.
For employers with union and non-union employees, you’ll
need to aggregate all employees to determine your number of
full-time equivalents. This applies to any penalties you may
need to pay, as well.
Provision
To determine if you fall
below 100 full-time
equivalent employees
In 2015
Use either the
average 12 months
of 2014 or any
consecutive 6
months in 2014
Avoid Penalty A if you offer
To at least 70%
minimum value, affordable
of your full-time
coverage
employees
If you don’t offer coverage
$2000 x (# of FT
to at least this %, Penalty A
employees
will apply, which is:
minus 80)*
If there are full-timer’s to
$3000 x # of FT
whom you don’t offer
employees who
receive a
coverage, or if you offer
coverage but it does not
subsidy* (not to
meet minimum value or is
exceed 2015
not affordable, Penalty B
Penalty A)
will apply, which is:
In 2016
Use the average
12 months of
2015
To at least 95%
of your full-time
employees
$2000 x (# of FT
employees
minus 30)*
$3000 x # of FT
employees who
receive a
subsidy* (not to
exceed 2016
Penalty A)
* This penalty applies if at least one employee receives a
Federal subsidy through a state Exchange.
For Non-Calendar Plan Years
You may not need to pay a penalty for months prior to your
medical plan renewal date in 2015; however, there are a
number of requirements that must be met. See our article
“The Non-Calendar Plan Year” for additional information.
GHB is the largest brokerage firm south of Tacoma specializing in Employee Benefits and Property/Casualty
coverage. Our approach to insurance is straightforward. Life is complicated enough without having to decipher
the mumbo jumbo that comes with buying insurance. From PPACA, to stop loss, to EOB, to umbrella policy, GHB
knows what they all mean and explains them to you in a language you will understand. Call us at 800.789.5011
or view our services online at www.GHBInsurance.com.
This article is provided for informational purposes only. Please contact your
attorney and/or accountant to determine if this information may affect your business. © 2013 GHB Insurance