Starting January 1, 2015, employers with 100 or more employees will be required to provide at least 70% of their employees with health insurance coverage. The long delayed Affordable Care Act (ACA) will be implemented in two stages with health insurance requirements and penalty provisions for employers with 50 or more employees set to begin on January 1, 2016. 

The health care deadlines for employer compliance under the ACA are:

• January 1, 2015 for Large Employers (consisting of 100 or more full-time employees); and
• January 1, 2016 for Medium-Sized Employers (consisting of 50-99 full-time employees).

     Starting January 1, 2015 large employers that offer coverage to at least 70% of its full-time employees will not be subject to penalties by the IRS.  However, even if a large employer meets the 70% threshold, it could still face a $3,000 IRS penalty for every full-time employee who isn't offered affordable health care.  Health care is considered unaffordable if an employee's share of the health insurance premium exceeds 9.5% of the employee's wages.  

      Starting with the 2016 plan year, a large employer must offer coverage to at least 95 percent of its full-time employees in order to avoid a $2,000 per employee IRS penalty. 

     An employer may determine its status by determining whether it employed an average of at least 50 (or 100) full-time employees or full time equivalent employees during any consecutive period of at least six calendar months during the 2014 calendar year (rather than the entire 2014 calendar year).  Starting in 2016, an employer must determine its status for the calendar year by averaging the total number of full-time equivalent employees for each of the 12 months in the preceding calendar year.

     Employers should take the time now to review insurance plan procedures and payroll practices to ensure that they have an effective strategy in place to prepare and plan for compliance with the ACA rules.  While penalty provisions for employers with fewer than 100 employees do not kick in until 2016 it is recommended that you initiate the new health insurance programs now.  If you have questions about your obligations under the ACA you can reach out to your insurance plan administrator or call the LaBonte Law Group at 516-280-8580.