1. How do you know if your business is subject to the employer mandate?
The threshold for compliance can be determined with this formula, which you calculate on a monthly basis:
Take the number of employees working full-time (those who average more than 30 hours a week for the month) and add that to the number of hours part-time employees worked during the month plus 120 hours. That’s how to figure the full-time equivalence or FTE for employees who don’t work at least 30 hours a week.
2. How much will it cost to meet the new coverage requirements?
That can differ depending on your operation, as well as how minimum coverage is defined through the regulatory process.
3. What is the premium tax credit?
There is a federal subsidy to be used by those earning an amount up to 400% of the federal poverty level to help them afford coverage. The tax credit is available through the state health insurance exchanges, which play a vital role in certifying whether people are eligible for the premium tax credit.
4. Do all small businesses have to provide coverage?
No, only some do. Employers who have less than 50 full-time-equivalent employees cannot be subjected to the employer tax penalties.
5. Does the new law require part-time workers to be covered?
No, not necessarily. Part-time employees (those working an average of less than 30 hours per week) are counted only to determine whether a small business owner meets the 50 full-time equivalent threshold that’s required under the law. The employer responsibility section of the law does not require employers to provide health care coverage to part-time employees, or to pay health care penalties.
6. Who will have to pay a penalty for not providing health care coverage?
That will fall on employers whose business meets that 50 full-time equivalent standard. Those employers may opt not to provide health care coverage to full-time employees, but it could result in a penalty. If at least one employee uses a premium tax credit to get coverage at a state exchange, the employer will be subject to pay a penalty of $2,000 per full-time employee per year (or $167 per month).
Small business owners may exclude the first 30 full-time employees when calculating this penalty. For example, let’s say an employer has 60 full-time employees and does not offer health insurance coverage, but one or more employees use a premium tax credit on the state exchange. That employer could face a yearly penalty of $60,000, assuming a constant workforce. That would be figured as 60 total full-time employees minus the 30 full-time employees excluded from the calculation. The result would be 30 employee times the $2,000 penalty giving a $60,000 penalty. And, it should be noted that the penalty is computed and assessed on a monthly basis.
7. What type of health coverage would need to be offered to full-time employees?
Business owners who employ more than the 50 full-time equivalent of employees need to provide affordable “minimum essential coverage” with at least a 60-percent actuarial value in order to meet what the law requires. “Minimum essential coverage,” however, is still being defined through the regulatory process. We’ll keep you informed here as more details become clear.