An employer with at least 50 full-time employees, including full-time equivalent employees on average during the prior year, is subject to:
- The employer shared responsibility provisions, and
- The employer information reporting responsibilities during the current calendar year.
Under the Affordable Care Act’s employer shared responsibility provisions, employers must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees and their dependents, or potentially make an employer shared responsibility payment to the IRS.
- In general, an employer that does offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents will be liable for a responsibility payment to the IRS if at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace. On an annual basis, this payment is equal to $3,000 (indexed for future years) but only for each full-time employee who receives the premium tax credit.
- In general, an employer that does not offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents will be liable for a shared responsibility payment if at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace. On an annual basis, this payment is equal to $2,000 (indexed for future years) for each full-time employee, with the first 30 employees excluded from the calculation. This calculation is based on all full-time employees (minus 30), including full-time employees who have minimum essential coverage under the employer’s plan or from another source.
The same employers that are subject to the employer shared responsibility provisions also have information reporting responsibilities regarding minimum essential coverage offered to employees. These responsibilities require employers to send reports to employees and to the IRS on forms:
- 1095-C: Employer-Provided Health Insurance Offer and Coverage and
- 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.
Employers with less than 50 full-time equivalent employees who sponsor self-insured group health plans – must report information about employees and their spouse & dependents using form 1095-B and 1094-B.
The penalty for failure to file an information return generally is $250 for each return for which such failure occurs. The total penalty imposed for all failures during a calendar year cannot exceed $3,000,000.
Notice 2016 – 70 extends the due dates for furnishing to individuals the 2016 Form 1095-B, Health Coverage, and the 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from January 31, 2017, to March 2, 2017. This notice also provides for transitional good-faith relief from the penalties imposed.
I created this blog to help understand certain basic aspects of U.S. tax law. Of course, each situation is unique and nothing that is on this site will ever replace the expert advice of a tax professional.
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