Are you aware of the employer mandate section of the Affordable Care Act (ACA)? This means that as an employer, you must provide coverage or pay a tax penalty if you have 50 or more full-time and full-time equivalent employees. The mandate is in effect and now is the time to consider how you will comply. Is your business ready?
Our pay or provide decision chart can help you determine whether your business applies to the mandate.
This article outlines some of the important things you need to know about the ACA, and how you can comply in the most affordable way, including how to avoid any IRS penalties.
Decide Now Whether to Pay or Provide in 2016
To comply with the Employer Mandate for 2016, now is the time to decide whether to sponsor a health plan or pay the IRS tax penalty. Also, it’s vitally important to decide in time to adopt a plan and communicate with your employees. After all, they will also face a personal tax penalty if they don’t get coverage. By waiting to decide, employees will be forced to make other arrangements (like going through the Exchange) and then they’ll likely need to un-enroll once they are offered your company-sponsored plan—if you choose the option costing less than the cost of the employer mandate tax penalty.
Also, since this is a major first-time implementation year for thousands of employers, the health insurance companies will be overwhelmed with the last-minute high demand. This was seen last year when the employer mandate became effective for employers of 100 or more, and it will be an even larger tidal wave this year.
This is why it’s important to roll out and communicate the details of a company-sponsored plan by late September or in October at the very latest. Both employers and employees need to make a health insurance decision in time for the January 1st deadline.
What are Your Options?
- Provide a major medical group health plan
- Don’t do anything at all and pay the penalty
- Offer a minimal Essential Coverage/Affordable Minimum Value (MECAMV) Plan
How to Save Money and Avoid the Penalty
There are benefits options available that vary greatly in terms of cost.
Some, though, can save you substantial amounts of money. While offering major medical is an option, it is important to research before moving forward with your benefits plan initiative.
The worst thing to do, however, is nothing at all: for example, if you have 75 full-time employees, the penalty can cost you up to $90,000; all of which is non-tax deductible.
The MECAMV Plan Can Help You
FrankCrum has developed a MECAMV Plan, which stands for Minimal Essential Coverage Affordable Minimum Value. This benefit plan can be less expensive than the IRS tax penalty and major medical. It also addresses the employer mandate head-on to meet legal requirements and protect your company from penalties.
Some benefits of the MECAMV Plan:
- ACA compliant wellness, immunizations, physician services, hospitalizations, etc.
- No employer penalty
- Enrolled employees avoid tax penalty
- Employer remains competitive for recruitment and retention purposes
- Lowest cost alternative for an applicable large employer
To learn more, please check out our employer mandate tax penalty solutions document.
The Takeaway
Regardless of whether you offer a health plan or pay the tax penalty, it is essential you decide soon. If you, as an employer, are not compliant with the employer mandate, you will face a hefty IRS penalty, and your employees will have to look elsewhere for a health plan. Decide now in time to make the best decision for your business and your employees.
We have compiled a resource kit for your business to learn more about how to comply with the ACA, click below to download your free copies:
