The Employer Shared Responsibility (ESR) provisions, or Employer Mandate, is a facet of the Affordable Care Act (ACA) that still confuses many employers. In fact, many employers still have questions about whether or not they have to provide their employees health insurance in 2015. According to the U.S. Treasury Department, “approximately 96 percent of employers are small businesses and have fewer than 50 workers and are exempt from the Employer Responsibility Provisions.” This article reviews what employers need to know about the ESR and who is subject to the provision in 2015.
Background on Employer Shared Responsibility
The Employer Shared Responsibility provision is the requirement for larger employers to either offer health insurance to employees, or pay a fee if/when an employee purchases through the Marketplace and receives a premium tax credit.
Due to delays of the Employer Shared Responsibility provision, many small business owners feel confused about how the requirement impacts their business.
2015 is a "phase-in" year for the employer mandate, as there is transition relief available for some employers with 50 to 99 Full Time Equivalent (FTE) employees. For larger employers with 100+ FTE, this requirement starts in 2015.
For larger employers, click here to read more about calculating ESR fees in 2015 for not offering health insurance.
Other ESR Phase-Ins
In order to avoid a payment for failing to offer health insurance, employers need to offer coverage to 70 percent of their full-time employees in 2015. Employers will be required to offer coverage to 95 percent of their full-time employees in 2016 and beyond.
Employers with non-calendar year plans (plans that don’t start on January 1st) will be able to begin compliance with the ESR on the start date of their plan in 2015.
Employers will not be penalized for not offering coverage to their employees’ dependents in 2015 so long as they are making arrangements to do so in 2016.
Employers can calculate FTE employees in the previous year by reference to a period of at least six consecutive months, instead of a full year.
Employers Subject to the ESR Need to File Information with the IRS
Employers who are subject to the ESR will be required to provide information as to whether they offered full-time employees and their family members access to insurance that provides minimum essential coverage.
The IRS is requiring that employers file Forms 1094-C and 1095-C. Employers must also provide Form 1095-C to their full time employees. Employers must provide Form 1095-C and employee statements to their full-time employees on or before January 31, at the end of the applicable calendar year.
Forms 1094-C and 1095-C are due by February 28 (or March 31 if filing electronically) for small employers following the end of the applicable calendar year.
Do you have any questions about the Employer Shared Responsibility? Leave a comment below.