Large Employers and the Affordable Care Act — Pay or Play?

Posted by Donna Craig in Jul, 2014

The Patient Protection & Affordable Care Act (“PPACA”) requires large employers to offer their full-time employees and their dependents up to age 26 affordable health insurance that meets minimum value requirements.  Failure to comply with these provisions of PPACA exposes employers to financial penalties.

In February 2014, the Internal Revenue Service issued regulations implementing the mandate intended to clarify the requirement for larger employers.  Instead of looking at the bigger picture some large employers are simply decreasing “full-time” employees’ schedules to 29 hours per week in an attempt to skirt the PPACA.  But is this the most cost effective approach, or simply penny wise and pound foolish?

 In determining if a large employer should pay for affordable health insurance for its full-time employees or incur the penalty, it must evaluate and determine which benefits will increase costs, determine which benefits will provide tax deductions or tax credits, and then weigh the pros and cons.  Some factors to consider include:

• Know how “large employers” is defined during the transition period in calendar years 2014, 2015 and 2016
• Be familiar with the three optional “safe harbors” to determine whether coverage is affordable to an employee
• Use a calculator or estimator tool to determine health care costs rather than needlessly decreasing employees’ hours and morale

 It’s essential that employers, no matter how large or small their organizations, know all the facts, consequences, and implications of PPACA compliance and non-compliance.  For assistance navigating these issues, please contact The Health Law Center, PLC – we’re happy to help!