In the midst of all the uproar over the federal budget, the Affordable Care Act (ACA), and the government shutdown, part of Obamacare has been delayed even as most of the law remains in place. The Employer Shared Responsibility provisions of the ACA have been delayed one year until January 1, 2015.
The Employer Shared Responsibility Payment will apply to some large employers who don’t provide insurance that meets minimum standards. If a company has 50 or more full-time employees, and at least one employee qualifies to save money on monthly premiums in the Marketplace, that company may be required to make the payment.
In order to avoid the payment, employers must provide insurance that meets minimum standards in two areas. It must be deemed affordable and it must meet minimum value standards.
An employee’s insurance plan is considered affordable if their share of premiums does not exceed 9.5 percent of their annual household income. Minimum value, on the other hand, means that the plan covers at least 60 percent of total healthcare service costs for that individual. The U.S. Department of Health and Human Services provides a calculator to help employers determine whether a particular plan meets minimum value.
The amount of the Employer Shared Responsibility Payment is based on whether the company offers insurance. If a company does not offer insurance to employees, the payment will be 2,000 dollars per full-time employee, excluding the first 30 workers. If a company does offer insurance, but the plan does not meet standards for affordability and minimum value, the payment will be 3,000 dollars per employee who is eligible to purchase insurance on the Marketplace.
Unlike employer contributions to employee premiums, the Employer Shared Responsibility Payment is not tax deductible.
Despite the delay, most other phases of the ACA were enacted last week. Employers now have one year to make sure their insurance plans are affordable and provide minimum value to their employees, if they wish to avoid the penalty payment.