By now, you should be aware of the law set forth by the Affordable Care Act, which has also been dubbed as “Obamacare.” This law states that all businesses with 50 or more full time equivalent employees are required to provide affordable health insurance to at least 95% of their full time employees, as well as their dependents up to age 26. Companies with 100 or more full time equivalent employees must ensure and least 70% of their full time employees by 2015 and 95% by 2016. If an employer chooses not to obey this law, they will be charged a monthly fee, known as an Employer Shared Responsibility Payment, for each employee. For more detailed information, please visit the official Affordable Care Act website at https://www.healthcare.gov/.
Below are some frequently misunderstood points surrounding the Affordable Care Act, courtesy of obamacarefacts.com.
- The health care mandate is based on full time equivalent employees, which is defined as those working at least 30 hours per week, 130 hours per month, or 120 days in a year for your company. This is determined by an average of both part-time and full-time hours worked over the course of the year.
- Employers are required to offer health care to their employees and the dependents of those employees. Spouses of employees are not considered dependents.
- While employers are required to offer health care coverage, employees do not need to accept it in order for the employer to be considered in compliance.
- The typical fee for non-compliance is $2,000 per employee, paid in 12 monthly installments. However, if an employee purchases insurance through the federal marketplace and receives cost assistance, the fee increases to $3,000.
- The Internal Revenue Service will handle the collection of the Employer Shared Responsibility payments. However, employers are not required to include these payments on their tax return.
- These payments are not tax deductible.