By now, you have surely heard about the employer mandate included within the Affordable Care Act (ACA), often referred to as “play or pay.” (Quick recap: Employers must offer “minimum essential health coverage” to full-time employees that is both “affordable” and offers “minimum value.”) But do you understand all of the implications on your small or midsize business? Does the mandate apply to you? How do you calculate full-time employees? Do you factor in employees working for your company outside the United States? What if you make a mistake?
Here are a few startling details about the employer mandate that I’ve come across:
- If an employer subject to the mandate does not provide “minimum essential health coverage” to full-time employees and a full-time employee then obtains subsidized coverage on an exchange, the IRS may assess an annualized penalty equivalent to $2,000 multiplied by the total number of full-time employees in the workforce.
- If coverage offered is not considered “affordable,” then the IRS may assess an annualized penalty of $3,000 per eligible employee who seeks subsidized coverage under an exchange.
In June 2014, the U.S. Chamber of Commerce released a statement saying, “Despite the commendable efforts of the officials at the Treasury, exceedingly high administrative burdens and expenses remain as businesses grapple with how to comply with the reporting requirements contained in the statute.”
Fortunately, companies like AmeriFlex help businesses become “technology ready” for the upcoming changes. Most small to midsized companies do not have a full-time employee who spends his day researching the tax implications of the ACA, so it is not only helpful, but probably imperative, that SMB owners identify and invest in a solution that integrates payroll, time, labor, and HR/benefits administration while enabling real-time, ACA-compliant reporting. Spreadsheets, homegrown reports, and manual calculations will do little to simplify a highly complex process that has potentially significant financial consequences. Are you “technology ready” for the ACA? If you do not know, now is the time to contact us for a free consultation. An investment ensuring technology readiness for the ACA can dramatically reduce costs and administrative burden while allowing small to medium sized business owners freedom to focus more time, energy, and resources on what they do best – serve customers!