Thanks to a recent Supreme Court Ruling, the Affordable Care Act has been declared constitutional as is, and will therefore stand in its current form until Congress takes action to change it.
As a result of the law, a number of provisions affecting employers have become effective already, including the so-called 'shared responsibility ' provisions that will apply to all employers in the U.S. who employ 50 or more full-time equivalents, with certain exceptions for seasonal employees. The shared responsibility provision requires employers to pay a surtax if an employee applies for coverage via a state or federal exchange instead of getting covered via the employers' plan, and receives a taxpayer subsidy. The authorization for the shared subsidy payments is found in Title I, Subtitle F of the Affordable Care Act and Section 4980 of the Internal Revenue Code.
Effective Jan 1, 2015 and after, firms with a 100 or more full-time equivalent employees (FTE), and who's average annual wages above $250,000, will need to insure at least 70 percent of full-time employees by 2015, and 95 percent of employees by the following year. Employers with 50-99 employees or the full-time equivalents will need to start insuring their full-time workers by 2016. These employers are deemed "applicable large employers (ALEs) under the ACA. Employers with fewer than 49 employees are not considered ALEs and are therefore unaffected.
All ALEs falling under the shared responsibility mandate must make a monthly payment per employee to the U.S. Treasury.
What counts as an employee?
For the purposes of the Affordable Care Act, a full-time employee is any worker who is employed an average of 30 hours per week or more. For more information, see IRS Bulletin 13-45.
If your business was open during 2014, use your 2014 payroll information to make this determination. Otherwise, look at your existing and projected payroll information for 2015. For 2016, you will be defined as an ALE if you averaged at least 50 full-time equivalents during the course of the previous year.
What about seasonal workers?
The government takes seasonal workers into account. However, if the company only employs the requisite 50 employees for 120 days per year or fewer, then the company is not considered an ALE. Employees who are retail workers who are only employed during holiday seasons are also excluded from the ALE calculation.
Can I split my company up to get under the 50-employee threshold?
No. Section 4980H of the Internal Revenue Code establishes that employee headcounts of businesses held by common owners are combined for the purposes of calculating whether the company qualifies as an ALE.
I run a non-profit, 501(c)(3) corporation. Am I exempt?
The 50 employee/full-time equivalent test for determining ALE status is applied without regard to for-profit/not-for-profit status. Government entities, including Indian tribal government entities, are also not exempt from the 'shared responsibility' mandate.
I have employees who are eligible for a health plan via their partners/spouse's plan, Medicare or Medicaid. How are they accounted for?
These employees are also counted for the purposes of determining your company's status as an ALE.
Are employees working outside the United States counted for the purposes of determining ALE status?
No. The determination is made using your U.S. payroll information. For example, if a very large company had a small operation in the United States, with fewer than 50 employees, that company would not be subject to the shared responsibility mandate.
How do I make a Shared Responsibility Payment?
Follow the IRS's published instructions for Form 8965.