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.<\/p>\n
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.<\/p>\n
What does employer shared responsibility mean?<\/strong><\/p>\n Employers with 50 or more full-time employees who do not offer health coverage that is \u201caffordable\u201d and that provides \u201cminimum value\u201d to their full-time employees can potentially make payments (Penalties) to the IRS which is considered an employer shared responsibility.<\/p>\n How many penalties are there?<\/strong><\/p>\n There are two separate penalties \u201cA\u201d penalty and \u201cB\u201d penalty. As an employer you will not be required to pay both penalties in the same year.<\/p>\n Do the penalties vary per year?<\/strong><\/p>\n Yes, they started with base penalties in 2014 \u201cA\u201d Penalty = $2,000 and \u201cB\u201d Penalty = $3,000. Each calendar year the amount increases for inflation.<\/p>\n 2015 \u201cA\u201d Penalty = $2,080 and \u201cB\u201d Penalty = $3,120 2016 \u201cA\u201d Penalty = $2,160 and \u201cB\u201d Penalty = $3,240 2017 \u201cA\u201d Penalty = $2,260 and \u201cB\u201d Penalty = $3,390 2018 \u201cA\u201d Penalty = $2,320 and \u201cB\u201d Penalty = $3,480<\/strong><\/p>\n * These are annual numbers, it is calculated on a monthly basis not a flat amount.<\/p>\n What is Penalty A? How is it calculated?<\/strong><\/p>\n 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.<\/p>\n Example: If you have 200 employees that are full-time in 2018 but do not offer any type of health insurance.<\/p>\n 200 \u2013 30 = 170 x $2,320 = $394,400 Penalty<\/p>\n What is Penalty B? How is it calculated?<\/strong><\/p>\n 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.<\/p>\n Example: If you have 200 employees that are full-time in 2018 but only 2 receive a subsidy for the health exchange.<\/p>\n $3,480 x 2 = $6,960 Penalty<\/p>\n