Well you are not alone. If you are in the staffing industry it becomes even more complex. Just one more thing to add to your already stressful plate.
How do you avoid penalties vs. How can you have a compliant plan if you are not able to reach participation mandates. It is tough to way out the options when the penalties are so confusing. I did some research to help educate myself and thought I would share to help business owners make educated decisions on complex topics.
Here are some helpful Q&A’s
What does employer shared responsibility mean?
Employers with 50 or more full-time employees who do not offer health coverage that is “affordable” and that provides “minimum value” to their full-time employees can potentially make payments (Penalties) to the IRS which is considered an employer shared responsibility.
How many penalties are there?
There are two separate penalties “A” penalty and “B” penalty. As an employer you will not be required to pay both penalties in the same year.
Do the penalties vary per year?
Yes, they started with base penalties in 2014 “A” Penalty = $2,000 and “B” Penalty = $3,000. Each calendar year the amount increases for inflation.
2015 “A” Penalty = $2,080 and “B” Penalty = $3,120 2016 “A” Penalty = $2,160 and “B” Penalty = $3,240 2017 “A” Penalty = $2,260 and “B” Penalty = $3,390 2018 “A” Penalty = $2,320 and “B” Penalty = $3,480
* These are annual numbers, it is calculated on a monthly basis not a flat amount.
What is Penalty A? How is it calculated?
Penalty A is the failure to offer health insurance to 95% of full-time employees. This is triggered if one full-time employee receives a federal premium subsidy. They exclude the first 30 employees.
Example: If you have 200 employees that are full-time in 2018 but do not offer any type of health insurance.
200 – 30 = 170 x $2,320 = $394,400 Penalty
What is Penalty B? How is it calculated?
Penalty B is offering health plans to full-time employees that fails to meet the minimum value requirement or affordability requirement. This only takes place if one of your full-time employees receives a federal premium subsidy.
Example: If you have 200 employees that are full-time in 2018 but only 2 receive a subsidy for the health exchange.
$3,480 x 2 = $6,960 Penalty
For more details here is the IRS Link