In just a couple of months, the Affordable Care Act (ACA), i.e. Obamacare, will kick in for businesses with 100 or more employees. Under the law, businesses with 100 or more employees on their payroll will need to start providing health benefits to at least 70 percent of their full-time workers in 2015, and to 95 percent by 2016. Companies that fail to meet these targets will be subject to penalties that start at $2,000 per employee. Businesses with 50 to 99 full-time employees will need to start insuring workers by 2016.
One area of that business owners need to be clear about, is the Affordable Care Act definition of a full-time employee which is 30 hours a week or more. Obamacare requires employers to collect signed waivers from their employees who opt not to sign on to a company insurance plan. Even if an employer opts not to offer insurance, they are still required to file forms to substantiate the number of full-time and part-time workers they employ.
The required documentation means that businesses need to be prepared to monitor their employees’ hours—especially part-time employees—to make sure that they don't average more than 30 hours a week. Employers must have a process in place to document that they have offered insurance coverage to their full-time workers.
The penalties for non-compliance are severe. For 2015, companies with 100 or more employees that don't offer coverage may be liable for fines of $2,000 and $3,000 per worker next year. In 2016, the employee threshold will drop to 50 or more employees.
Businesses that fall under the new mandate should also be aware that if any one of their employees receives a premium tax credit from the Obamacare insurance marketplace because the coverage they offer is deemed unaffordable or does not cover 60 percent of total costs, the employer must pay a Shared Responsibility Payment of either $3,000 for each employee getting a credit or $750 for each of their full-time employees, whichever is less. Under the ACA, insurance is considered unaffordable if an employee's share of the premium costs for employee-only coverage is more than 9.5 percent of their yearly household income.
As you can see, the next phase of the ACA law brings with it considerable new responsibilities for business owners.