Mid-Size Companies Must Offer Coverage in 2016

November 2, 2015 Robert Sheen Affordable Care Act, Health Care Coverage, Regulations

Employers with 50 to 99 full-time workers, or full-time equivalents, will be required to offer Affordable Care Act-compliant health insurance in 2016.

Companies with 100 or more employees (or FTEs), have been subject to the ACA mandate since the beginning of 2015. Employers in the 50-to-100 employees were given an extra year to prepare for the requirement. Those with less than 50 are currently exempt from having to offer insurance.

Starting in 2016, all employers subject to the rule must offer coverage to at least 95% of their employees and to the employees’ dependents, including children up to age 26. They must also provide information to their employees and to the IRS as required by the ACA.

Employees are not obliged to enroll in the plan sponsored by their employer. They are required by the ACA to have health insurance or pay a penalty but are free to obtain their insurance from the provider of their choice.

However, individuals who buy insurance through a federal or state marketplace are not eligible to receive subsidies to offset part of the cost of that coverage if such individuals were offered through their employer’s coverage that meets minimum value and is affordable within the meaning of the ACA. Consumers who don’t have access to employer-sponsored insurance are eligible for the subsidies.

Employers who fail to offer coverage that meets ACA standards for affordability and benefits can face an annual penalty of $2,000 per employee, minus the first 30 employees in 2016.

If the employer fails to offer qualifying coverage and one or more employees receives subsidies for insurance purchased in a marketplace, the employer must pay a penalty of approximately $3,000 for each employee receiving a subsidy.

For purposes of the ACA’s “Employer Shared Responsibility” provisions, a worker is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week or 130 hours of service in a calendar month.

A “full-time equivalent employee” is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee. For example, if two workers each average 15 hours of work per week or 130 hours in a calendar month, they are counted as one full-time equivalent employee.

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