The Affordable Care Act (ACA) has always kept employers on a high alert, since its inception in 2010, with all the changes it wrought in employee benefits. The ACA, also known as Obamacare, has singlehandedly required many plans to be eliminated, benefits to be added, made changes to different rules, and brought about many delays in implementing some of its requirements. With all the negative press it received, the Act is here to stay. The Congressional Budget Office’s prediction of an estimated deficit of $353 billion, should the Act be repealed by any new government which may be formed in 2017, is bound to ensure that the law will survive and stay in force. With Obamacare’s Cadillac tax scheduled to become effective in 2018, the cost of healthcare increasing, and insurance premiums rising; employers cannot delay making some difficult decisions about their benefit plans in compliance with the ACA’s play-or-pay requirements, individual mandate, and eligibility standards for public exchange subsidies.
Under the ACA, large employers (with 50+ FTEs) who do not offer coverage for all of their full-time employees, or offer unaffordable minimum essential coverage or offer plans with high out-of-pocket costs could face tax penalties. Employers who fail to comply with the ACA pay fines called “employer shared responsibility payments”. The employer may also be subject to a tax penalty if there is at least one full-time employee certified as having purchased health insurance through an exchange and was eligible for a tax credit or subsidy. The speculation and suspense with regard to employer mandate penalties under the Affordable Care Act have finally come to an end.
The Internal Revenue Service (IRS) has finally confirmed that the penalties, adjusted for inflation, for failing to offer minimum essential coverage to fulltime employees comes to $2080 and the penalty for failing to offer minimum value affordable coverage comes to $3120 in 2015. These penalties will hit $2160 and $3240 respectively for 2016. It has also clarified the application of ACA market reform requirements to various types of employer healthcare arrangements, payment plans and reimbursement arrangements. It helps determine the full-time status of an employee.
Wondering how this would impact the use of contingent workers and what the pay or play rules for them are? Let’s find out.
The IRS has introduced some new rules related to the employment of contingent workers, be they temporary workers or independent contractors 1099.
Employers need to make sure that they consider the various options available to them under the ACA and decide whether to pay or play. Please comment and share your decisions and reasoning with our readers.
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