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Shared Responsibility/Employer Payment (i.e. “Play or Pay”)
Employers with 50 or more FTEs will be subject to a shared responsibility payment if at least
one full-time employee obtains a premium tax credit or a cost-share reduction through the
Health Insurance Marketplace. The penalty calculation varies based on whether or not the
employer offers affordable, minimum value coverage to substantially all full-time employees
and their dependent children under the age of 26.
2015 – 2018:
Solidifying
Health Care
Reform
and Future
Implementation
Update
On Feb. 10, 2014, the federal government announced a delay to the employer shared-
responsibility penalty, giving employers time to transition into the new rules. Given this delay,
starting in 2015 businesses with 100 or more full-time equivalent employees need to provide
affordable, minimum value health care coverage to 70 percent of all full-time employees and
their dependents, unless the employer qualifies for 2015 dependent coverage transition relief,
or face a penalty.
In 2016, the 70 percent threshold is increased to 95 percent, and the shared responsibility
penalties will also apply to employers with 50 or more full-time equivalent employees.
Dependent Coverage Transition Relief
There is no penalty for failure to cover dependents during the 2015 plan year if the employer
takes steps during 2015 toward satisfying the requirement in the following plan year.
This transition relief applies to employers for the 2015 plan year for plans under which: (1)
dependent coverage is not offered; (2) dependent coverage that does not constitute minimum
essential coverage is offered; or (3) dependent coverage is offered for some, but not all,
dependents. The transition relief is not available to the extent the employer offered dependent
coverage during either the 2013 plan year, or the 2014 plan year and subsequently dropped
that offer of coverage. The transition relief only applies for dependents who were without an
offer of coverage from the employer in both the 2013 and 2014 plan years. In addition, the
employer must take steps during the 2014 or 2015 plan year (or both) to extend coverage
under the plan to dependents not offered coverage during the 2013 or 2014 plan year (or both).
Minimum Essential Coverage Reporting
Employers providing minimum essential coverage must report information to the Internal
Revenue Service (IRS) on the employees receiving coverage, dates of coverage and other
information the IRS may require. The report must include the employer name, the employer
paid portion of the premium, and other information the IRS may require with respect to the
small employer tax credit. The annual reporting will begin in 2016 for the 2015 plan year.
Statements are also to be furnished annually to employees by January 31
st
.
