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Small Business Employee Benefits and HR Blog

Employer Shared Responsibility (ESR) - Top 4 Small Business FAQs

August 18, 2014

ESR FAQsOne of the most important issues on the mind of business owners is the Affordable Care Act and its Employer Shared Responsibility provision. This article answers the top four small business questions about the Employer Shared Responsibility (ESR) provision.

FAQ #1: What is the Employer Shared Responsibility Provision?

The Employer Shared Responsibility provision, also called ESR or the employer mandate, is the requirement for larger employers to either offer health insurance to employees, or pay a fee if/when an employee buys subsidized health insurance through the Marketplace.

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 Shared Responsibility provision, as there is transition relief available for some employers with 50 to 99 full-time equivalent employees.

FAQ #2: When Does the Employer Shared Responsibility Provision Go into Effect?

The Employer Shared Responsibility provision goes into effect in 2015. For 2015, the Employer Shared Responsibility fee is equal to the number of full-time employees the employer employed for the month (minus 80) multiplied by 1/12 of $2,000, provided that at least one full-time employee receives a premium tax credit/subsidy for that month.

If you are a larger employer, click here to read more about calculating ESR fees in 2015 for not offering health insurance.

FAQ #3: What are the IRS Reporting Requirements for the ESR Provision?

Employers who are subject to the Employer Shared Responsibility provision 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.

The Internal Revenue Service (IRS) issued draft versions of the Affordable Care Act (ACA) reporting forms large employers will begin using next year to report health coverage. Here are links to the draft forms for employers:

FAQ #4: When Do Employers Subject to ESR Reporting Requirements Need to File Information with the IRS?

Employers who are subject to the Employer Shared Responsibility provision 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.

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