Do You Know How PPACA Affects Employers With 50 Or More Full Time Equivalent Employees?

In a recent update released on the IRS.gov website, the Internal Revenue Service offered Affordable Care Act guidance for large employers with 50 or more full time equivalent employees. Since some of the provisions of ACA apply only to large employers, which are generally those with 50 or more equivalent employees working full-time, the goal of this guidance is to let large employers know about deadlines approaching and compliance requirements that need to be met. As a group benefits and insurance leader for companies across Southern California, Pontrelli, Timour & Associates, Inc. offers this synopsis of the main points covered by the IRS in the recent update.

Large Employers Under The Affordable Care Act

50 or more full time equivalent employees

50 or more full time equivalent employees

If you have 50 or more full-time equivalent employees, your company is considered as an applicable large employers or ALEs. Applicable large employers are subject to the employer shared responsibility provisions and the annual employer information return provisions. For example, in 2016 applicable large employers will have annual reporting responsibilities in relation to health insurance. These reporting responsibilities detail whether your company offers health insurance to your employees and what kind of health insurance was offered in 2015 to your full-time employees.

Regardless of size, all employers that provide self-insured health coverage must file an annual return reporting certain information for the employees and other individuals they cover. The first returns are due to be filed in 2016 for the year 2015. Such filings have now become an inherent part of business tax filings with the IRS.

100 Or More Full Time Equivalent Employees

Effective for calendar year 2015, applicable large employers with 100 or more full-time or full-time equivalent employees will be subject to the employer shared responsibility provision. The shared responsibility provision goes hand-in hand with the possibility of having to make a shared responsibility payment. Like a penalty, the shared responsibility payment applies to employers that do not offer adequate, affordable coverage to their full-time employees. As a result of not offering such coverage, if one or more of those employees get a premium tax credit, the shared responsibility payment will be triggered for ALEs with 100 or more full time equivalent employees.

50 Or More Full Time Equivalent Employees

As for the smaller ALEs with 50 or more full time equivalent employees, but less than 100, the employer shared responsibility provisions will be activated from 2015 to 2016. Given this change and potential penalties involved, calculating the number of employees becomes of paramount importance. Any employers that have close to 50 employees or whose workforce fluctuates throughout the year should consult with a benefits administration expert to figure out exactly what they need to stay in compliance.

Although the basic calculation seems simple, it can be particularly complex given the natural fluctuations of a large workforce on an annual basis. The IRS describes the calculation needed:

To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.

The Challenge Of 50 Or More Full Time Equivalent Employees

Did you know that employers with more than 50 cannot purchase health insurance coverage for its employees through the Small Business Health Options Program? With the SHOP Marketplace off limits, it becomes even more for employers with 50 more full time equivalent employees to work with a groups benefits provider like Pontrelli, Timour & Associates, Inc. that can answer your questions, lower your costs and help your company stay in compliance. To learn more about how PT Benefits can help, please call us today at 626-795-4138 to speak with a member of our customer-centric team.

Chris Pontrelli

About 

Principal at Pontrelli, Timour & Associates, Inc.

A California native of Pasadena, Chris Pontrelli received his Health & Insurance License from the California Department of Insurance in 1993. After working at Banker’s Trust in their 401k administration division, Chris Pontrelli set-up a desk in his father’s insurance office and built his group insurance business from the ground up. Chris Pontrelli teamed-up with childhood friend Raphy Timour to form Pontrelli, Timour & Associates, Inc. in 2003.

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