Moving into 2016, employers may want to brush up on the responsibilities that they have towards their employees regarding insurance. Health insurance has changed significantly over the past few years and this may lead to some confusion in human resources departments.
Requirements and Penalties for Large Companies
Companies that have 50 or more full-time employees or full-time equivalent employees will suffer from penalties if they don't provide affordable health insurance coverage. For the purposes of the affordable care act, a full-time employee is considered an employee who works more than 30 hours a week. While employers aren't outright required to provide insurance, the will need to pay the penalty if they don't offer at least minimum essential coverage.
Collective Employment for Multiple Companies
Employers with multiple companies will find their companies combined when determining the number of full-time employees. This will also apply in the event that two companies are related enterprises or work closely together. Thus, an employer who has two businesses with 30 employees and 20 employees each will still suffer from penalties if they don't provide adequate healthcare coverage for all of their employees. This provision is meant to discourage the splitting of companies to avoid penalties.
Companies With Full-Time Equivalent Employees
Part-time employees may be combined to constitute a full-time equivalent employee. A company with 100 part-time employees who work half the week will be considered to be a company that has 50 full-time employees. Consequently, the company will suffer from penalties if it does not provide affordable healthcare coverage.
Minimal Essential Coverage for Employees
As noted, employers must maintain minimum essential coverage for employees if they have more than 50 full-time employees. But what is minimum essential coverage? Minimum essential coverage must be able to cover at least 60% of the standard medical costs for a standard subsection of the population. Insurance companies will be able to direct employers to the plans that meet these requirements, as they may change based on rising medical costs or needs.
Small businesses do not have as many concerns related to health insurance as larger organizations. Many businesses under 25 employees in size will instead find themselves qualifying for tax breaks associated with health insurance. Employers concerned about the growing costs and responsibilities associated with insurance and benefits may want to consider leasing or contracting employees rather than hiring them directly. OneTech solutions can help.