Large Employers and the Affordanble Care Act (ACA)

What is a large employer? A large employer is one that has 50 or more full time employees. If your company is right on the line in terms of this count, you may find it helpful to review the various methods of determining your employee count.

Large Employer Calculator

Why does the number of full time employees at your company matter?
The ACA imposes a penalty (delayed until 2015) on large employers that do not offer coverage to their employees that meets the minimum essential value of benefits and/or if the coverage offered is not affordable to the full time employee. This penalty will only apply if one of your employees purchases health insurance on the exchange and receives a subsidy.

Coverage Requirements to avoid penalty

Minimum value: The coverage must meet the minimum value of 60%. To determine if your coverage meets this minimum value, you can input your data into the minimum value calculator at CMS Minimum Value Calculator Link, or contact us to help you determine this for your company.

Affordability: The coverage is considered affordable if the employee’s contribution in premium for the plan does not exceed 9.5% of the household income. Since employers may not know the employees household income, the law allows for a safe harbor application to help employers determine affordability for their employees. The employer can make sure that the employee portion of the employee only premium for the lowest cost plan does not exceed 9.5% of the employees W-2 wages.

Employer Penalties

The “Pay or Play” Penalty was originally going to be imposed starting January 2014; however, there has been a delay until January 2015.

  • If you do not offer any coverage: the penalty is equal to the number of full time employees, minus 30, multiplied by $2,000.
  • If you offer coverage, but it is not minimum value or affordable: the penalty is $3,000 per each full time employee who receives a subsidy on the exchange.

What is the exchange and who is eligible for a subsidy?
The ACA calls for the creation of affordable health insurance exchanges whereby individuals and small businesses can purchase private health insurance. If someone purchases insurance in the exchange, they may be eligible for a government subsidy to offset the cost for the insurance. For more information on the exchanges, click here.

What requirements do employers have to comply with in regards to the ACA? There are numerous requirements on employers that are part of the new law. Some have already been required and some are coming up in the future. For a listing of some of these requirements, click here.

What is the best strategy for large employers in regards to offering benefits to their employees? There is not one solution for all employers as there are many factors to consider and review. Let Burchfield Insurance meet with you to review your current benefit plans and your corporate goals to help develop a winning strategy for your company.