|5 Must-Know Facts About ‘Pay or Play’
Recently issued final rules provide important guidance on the ‘pay or play‘ provisions under Health Care Reform. These provisions require large employers–generally those with at least 50 full-time employees, including full-time equivalents–to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents), or pay a penalty tax if any full-time employee receives a premium tax credit for purchasing individual coverage on a Health Insurance Marketplace.
Below are five things employers should know about the ‘pay or play’ rules:
1. The requirements are delayed for certain large employers.
|2. Affiliated employers are generally combined to determine their workforce size.
Companies that have a common owner or are otherwise related generally are combined and treated as a single employer, and so would be combined for purposes of determining whether or not they collectively employ at least 50 full-time employees (including full-time equivalents). If the combined total meets the threshold, then each separate company is subject to the ‘pay or play’ provisions, even those companies that individually do not employ enough employees to meet the threshold.
3. There are two methods employers may use to determine whether an employee is full-time.
The final rules describe approaches that can be used for various circumstances, such as for employees who work variable hour schedules, seasonal employees, and employees of educational organizations.
4. An employer may be liable for a penalty for 2015 under two circumstances.
5. Transition relief may be available to certain employers subject to the rules for 2015.
Our Employer Shared Responsibility section features additional information regarding ‘pay or play.’ Questions and Answers are also available from the Internal Revenue Service.
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