Shared Responsibility Payments

Posted by BAS - 09 April, 2015

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An applicable large employer (ALE) must offer affordable minimum essential coverage that provides minimum value to its full-time employees and their dependents or pay a tax penalty. Each separate employer member of the ALE group will be responsible for its own shared responsibility payment. 

1. Penalty for Failure to Offer Minimum Essential Coverage 

An ALE member will owe a payment if for any month it does not offer minimum essential coverage to at least 95% of its full-time employees and their dependents and if one or more full-time employees gets a tax credit to purchase coverage through the Exchange. 

For coverage in 2015, there are two types of relief from the potential penalty. 

  • Offer of Coverage Transition Relief. If an employer offers minimum essential coverage to at least 70% of its full-time employees and their dependents during each calendar month of 2015, the employer will not be subject to the penalty.
  • Dependent Transition Relief. If an employee’s dependents were not offered minimum essential coverage during 2013 or 2014, the employer will be considered to have offered coverage if the employer takes steps during 2014 or 2015 to extend coverage to dependents. 

The penalty is $2,000 for each full-time employee, excluding the first 30 full-time employees of the employer. The penalty will be determined on a month by month basis, which is $166.67 per month for each full-time employee. The penalty is indexed for inflation. 

Some transition relief is available for 2015. If an ALE with 100 or more full-time employees is subject to the payment, the employee count will be reduced by 80 instead of 30 to lower the penalty amount. 

2. Penalty for Failure to offer Minimum Essential Coverage that Provides Minimum Value 

An employer might be liable for an employer shared responsibility payment for each full-time employee who receives a premium tax credit for purchasing coverage through the Exchange if the employer’s coverage is not affordable, if the coverage does not provide minimum value, or if the employee is not one of the 95% of employees who are offered minimum essential coverage. An employer may be subject to this payment only if it is not subject to the payment described above. 

The penalty is $3,000 for each full-time employee who received a premium tax credit. The penalty will be determined on a month by month basis, which is $250 per month for each full-time employee who received the premium tax credit. The penalty is indexed for inflation.

BAS can assist with health care reform compliance. For more information about our health care reform data collection and reporting tools, contact your account manager or solutions@BASusa.com.

 


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