Employers with over 50 employees
ACA Mandate & Penalties
Major Points of the Employer Shared Responsibility – Mandate Provisions
Health Care Reform includes the employer mandate – shared responsibility mandate provisions, which require applicable large employers (IRS Website to determine if you are an ALE) to offer health coverage to full-time employees and their dependents. Those that do not offer coverage might be subject to the employer shared responsibility payment.
I’ll grant you, this can be quite confusing. See our other pages on the mandate, ale and the penalties.
- These provisions apply to applicable large employers, which includes tax-exempt and federal, state, local and Indian tribal government employers. You’re an applicable large employer if you have 50 or more full-time employees, including full-time equivalents.
- If you have fewer than 50 full-time employees, including full-time equivalents, you are not an applicable large employer and are generally not subject to these provisions. However, you are subject to the rules for large employers if you have fewer than 50 employees, but are a member of an ownership group that has 50 or more full-time equivalent employees,
- You are subject to the payment if any employee receives the premium tax credit from Covered CA and any one these conditions apply. Your organization:
failed to offer coverage to full-time employees and their dependents
offered coverage that was not affordable
offered coverage that did not provide a minimum level of coverage – Bronze
- You do not report or include an employer shared responsibility payment with any information return you file.
Some of the provisions of the Affordable Care Act only affect your organization if it’s an applicable large employer. An ALE is generally one with 50 or more full-time employees, including full-time equivalent employees. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.
- Applicable large employers have annual reporting responsibilities. You will need to provide the IRS and employees information returns concerning whether and what health insurance you offered to your full-time employees.
- If you’re an applicable large employer that provides self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover.
- ALEs must either offer minimum essential coverage that is affordable and that provides minimum value to their full-time employees and their dependents, or potentially make an employer shared responsibility payment to the IRS.
- Learn more about the employer shared responsibility provision.
- You may be required to report the value of the health insurance coverage you provided to each employee on their Form W-2.
- If you’re an applicable large employer with exactly 50 employees, you can purchase affordable insurance through the Small Business Health Options Program (SHOP). Or directly with an Insurance Company, no charge for our services. See button above or below to get a quote.
For more information, see the Affordable Care Act Tax Provisions for Employers
Determine if you are an
FTE Calculator Health Care.Gov
Our webpage on FTE Full Time Equivalent and ALE Applicable Large Employer
“full-time employee” means,
For the EmployER Mandates – In general The term fte with respect to any month, an employee who is employed on average at least 30 hours of service per week. 26 USC § 4980H Compare with the definition of employee – under California AB 1083 to comply with Health Care Reform.
Can you make them 1099 independent contractors and not employees?
FAQ’s, Resources & Links
Moulder Law Relief, Confusion Associated with §4980H(a) Transition Relief
On Feb. 10, 2014, the IRS and Treasury issued final regulations on the Employer Shared Responsibility provisions under section 4980H of the Internal Revenue Code. More information is available on the employer shared responsibility page. The following questions and answers provide helpful information about the guidance:
- Basics of the Employer Shared Responsibility Provisions: Questions 1-3
- Which Employers are Subject to the Employer Shared Responsibility Provisions: Questions 4-14
- Identification of Full-Time Employees: Questions 15-17
- Liability for the Employer Shared Responsibility Payment: Questions 18-23
- Calculation of the Employer Shared Responsibility Payment:Questions 24-26
- Making an Employer Shared Responsibility Payment: Questions 27-28
- Transition Relief: Questions 29-39
- Basics for Small Employers: Questions 40-42
- Related Provisions: Questions 43-47
- Additional Information: Questions 48-56
- What Is Group Coverage?
- Is Insurance Required?
- Is Your Business Eligible for Group Coverage?
- Who Is Eligible for Coverage?
- What Do Employers Have to Pay?
What do you and your employees value in a Health Plan?
Art Gallagher Health Care Reform FAQ's
Health Care Reform Explained
Kaiser Foundation Cartoon VIDEO
TEXT of Law
26 US Code §4980 H
(a) Large employers not offering health coverage
(1) any applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
(2) at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction [Enhanced Silver] is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
See our penalty page
(b) Large employers offering coverage with employees who qualify for premium tax credits or cost-sharing reductions
(1) In general If—
(A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
(B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and an amount equal to 1⁄12 of $3,000.
See our penalty page
(2) Overall limitation The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
(c) Definitions and special rules For purposes of this section—
(1) Applicable payment amount The term “applicable payment amount” means, with respect to any month, 1 ⁄ 12 of $2,000.
(2) Applicable large employer
(A) In general The term “applicable large employer” means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.
(B) Exemption for certain employers
(i) In general An employer shall not be considered to employ more than 50 full-time employees if—
(I) the employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and
(II) the employees in excess of 50 employed during such 120-day period were seasonal workers.
(ii) Definition of seasonal workers The term “seasonal worker” means a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor, including workers covered by section 500.20(s)(1) of title 29, Code of Federal Regulations and retail workers employed exclusively during holiday seasons. Learn More HCTT 2015-17
(C) Rules for determining employer size For purposes of this paragraph—
(i) Application of aggregation rule for employers All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as 1 employer.
See our webpage on common ownership and affiliated companies
(ii) Employers not in existence in preceding year In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is an applicable large employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.
(iii) Predecessors Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.
(D) Application of employer size to assessable penalties
(i) In general The number of individuals employed by an applicable large employer as full-time employees during any month shall be reduced by 30 solely for purposes of calculating—
(I) the assessable payment under subsection (a), or
(II) the overall limitation under subsection (b)(2).
(ii) Aggregation In the case of persons treated as 1 employer under subparagraph (C)(i), only 1 reduction under subclause (I) or (II)  shall be allowed with respect to such persons and such reduction shall be allocated among such persons ratably on the basis of the number of full-time employees employed by each such person.
(E) Full-time equivalents treated as full-time employees —- Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.
(F) Exemption for health coverage under TRICARE or the Veterans Administration – Solely for purposes of determining whether an employer is an applicable large employer under this paragraph for any month, an individual shall not be taken into account as an employee for such month if such individual has medical coverage for such month under—
(i) chapter 55 of title 10, United States Code, including coverage under the TRICARE program, or
(ii) under a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary.
(3) Applicable premium tax credit and cost-sharing reduction The term “applicable premium tax credit and cost-sharing reduction” means—
(A) any premium tax credit allowed under section 36B,
(B) any cost-sharing reduction under section 1402 of the Patient Protection and Affordable Care Act, and
(C) any advance payment of such credit or reduction under section 1412 of such Act.
(4) Full-time employee
(A) In general The term “full-time employee” means, with respect to any month, an employee who is employed on average at least 30 hours of service per week.
(B) Hours of service —The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
(5) Inflation adjustment
(A) In general In the case of any calendar year after 2014, each of the dollar amounts in subsection (b) and paragraph (1) shall be increased by an amount equal to the product of—
(i) such dollar amount, and
(ii) the premium adjustment percentage (as defined in section 1302(c)(4) of the Patient Protection and Affordable Care Act) for the calendar year.
(B) Rounding If the amount of any increase under subparagraph (A) is not a multiple of $10, such increase shall be rounded to the next lowest multiple of $10.
(6) Other definitions Any term used in this section which is also used in the Patient Protection and Affordable Care Act shall have the same meaning as when used in such Act.
(7) Tax nondeductible — For denial of deduction for the tax imposed by this section, see section 275(a)(6).
(d) Administration and procedure
(1) In general Any assessable payment provided by this section shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
(2) Time for payment The Secretary may provide for the payment of any assessable payment provided by this section on an annual, monthly, or other periodic basis as the Secretary may prescribe.
(3) Coordination with credits, etc. The Secretary shall prescribe rules, regulations, or guidance for the repayment of any assessable payment (including interest) if such payment is based on the allowance or payment of an applicable premium tax credit or cost-sharing reduction with respect to an employee, such allowance or payment is subsequently disallowed, and the assessable payment would not have been required to be made but for such allowance or payment.
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- Salary Discrimination §2716 – Not enforced
- Similarly Situated Employees
- §4980H – Shared responsibility Employer Mandate text of law
- 6056 – w -2 – etc Reporting
- Mandate – Employee Definition?
- Penalties – Employer Mandate MEC – Solutions?