Do I have to offer health coverage to my employees?
While no employer must offer coverage, some larger businesses may have to make a payment in 2015 or 2016.
The payment is called the Employer Shared Responsibility Payment and applies to employers of different sizes at different times. Read more below.
- If you have fewer than 50 full-time employees, you’re not subject to the Employer Shared Responsibility parts of the law any year. You may use the SHOP Marketplace to offer coverage for your employees.
The Employer Shared Responsibility Payment in 2015 or 2016
The Employer Shared Responsibility Payment applies to some businesses with more than 50 or 100 full-time employees who don't offer insurance, or whose coverage doesn't meet certain minimum standards.
Regulations announced February 10, 2014 have updated the following:
which employers must make the payment
which years some employers must make the payment
other conditions about the payment
The Internal Revenue Service offers detailed questions and answers about the Employer Shared Responsibility Payment.
The Treasury Department has a fact sheet summarizing recent updates on the Employer Shared Responsibility Payment.
Have questions about the SHOP Marketplace for businesses with 50 or fewer employees? Call 1-800-706-7893 (TTY: 1-800-706-7915). Hours: Monday through Friday, 9 a.m. to 7 p.m. EST. Agents and brokers helping small businesses may also use this number.
What if I'm not currently offering health coverage to my employees?
If you have 50 or fewer full-time equivalent (FTE) employees, you don't have to make a Shared Responsibility payment, whether you offer coverage or not. You may use the SHOP Marketplace to buy coverage for your employees.
If you have more than 50 FTEs and don't offer coverage, or offer coverage that doesn't meet certain standards, you may have to make the Shared Responsibility payment.
What if I decide to offer SHOP coverage this year?
If you have 50 or fewer full-time equivalent employees, you can apply for health coverage through the Small Business Health Options Program (SHOP). The SHOP is a new program that helps you buy health coverage for your small business.You can enroll any time during the year. Enroll by the 15th of the month and coverage can begin on the 1st of the next month.
- If you have fewer than 25 full-time equivalent employees and average salaries of $50,000 or below, you may qualify for a small business health care tax credit worth up to 50% of your premium costs. This credit is available only if you get your insurance through the SHOP Marketplace.
View detailed questions and answers on SHOP procedures, including eligibility, application, enrollment, employee communications, and more.
How is the Employer Shared Responsibility payment calculated?
The Employer Shared Responsibility payment is calculated different ways and is either $2000 or $3000 per employee per year depending on the circumstance. You don't have to make a payment on the first 30 full-time equivalent employees.
There are tax advantages to offering health coverage to your employees, but Shared Responsibility payments are NOT tax deductible.
The Internal Revenue Service has more information about the Employer Shared Responsibility payment.
How are seasonal employees counted?
The Internal Revenue Service has information on this topic in its Q&A about the Employer Shared Responsibility payment.
How are employees counted for the Shared Responsibility payment?
In order to be subject to the Shared Responsibility Payment, you must have at least 50 full-time equivalent (FTE) employees, or a mixture of full-time and part-time employees that's equal to at least 50 full-time employees.
100 part-time employees = 50 full-time equivalent employees (or 50 FTEs)
25 full-time employees + 40 part-time employees = 45 full-time equivalent employees (or 45 FTEs)
For calculating the Shared Responsibility payment, a full-time employee works at least 30 hours per week. Part-timers work at least 15 hours per week. The number of employees you have in 2014 will determine whether you'll be subject to the Shared Responsibility Payment for 2015.