Employers are encouraged but not required to offer health insurance to employees. The federal government uses a carrot and stick approach to encourage employers to offer health insurance.
The carrot comes in the form of premium tax deductions, payroll tax saving on employee contributions, and tax credits to small businesses.
The Affordable Care Act uses the stick. There are penalties that employers of certain sizes may have to pay if they do not offer an affordable option (9.5% of family income), or if employees purchase subsidized plans in the individual market.
There remains a lot of confusion over this issue in the wake of the passing of the health care reform law (ObamaCare, the Affordable Care Act) and justifiably so. Technically speaking, ObamaCare does not force any employer to offer health insurance to their employees, their is no criminal penalty for failure to do so.
That point made, the Affordable Care Act consists of a mix of tax incentives and tax penalties to supposedly induce employers to provide health insurance for their employees. First of all, for employers with 2 to 49 employees there are no tax penalties at all for failure to provide health insurance to their employees. A tax credit is offered but with enough limitations associated with it that only a tiny percentage of small employers have ever taken advantage of it.
For employers who are at and above the 50 full time and/or full time equivalent employee level they will be the ones who will be faced with tax penalties for failing to provide health insurance and/or failing to provide affordable health insurance to their employees. The first employers to be impacted will be those with 100 or more full time employees in 2015. Then, starting in 2016, employers in the 50 to 99 employee range will be subject to the same tax penalty.
The tax penalty will be $2000 per employee per year and will be a non-deductible business expense. Not surprisingly, the situation is more complicated than I have just described but there is not space here to go into all the details involved. Suffice it to say, this is an issue of great concern to many employers, especially ones who have not offered health insurance to their employees or a large segment of their employees in the past. The restaurant, hospitality and trucking industries are some common examples of industries that can expect to be adversely impacted financially by the tax penalty.
For consultation on this issue please feel free to contact me.
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The carrot comes in the form of premium tax deductions, payroll tax saving on employee contributions, and tax credits to small businesses.
The Affordable Care Act uses the stick. There are penalties that employers of certain sizes may have to pay if they do not offer an affordable option (9.5% of family income), or if employees purchase subsidized plans in the individual market.
That point made, the Affordable Care Act consists of a mix of tax incentives and tax penalties to supposedly induce employers to provide health insurance for their employees. First of all, for employers with 2 to 49 employees there are no tax penalties at all for failure to provide health insurance to their employees. A tax credit is offered but with enough limitations associated with it that only a tiny percentage of small employers have ever taken advantage of it.
For employers who are at and above the 50 full time and/or full time equivalent employee level they will be the ones who will be faced with tax penalties for failing to provide health insurance and/or failing to provide affordable health insurance to their employees. The first employers to be impacted will be those with 100 or more full time employees in 2015. Then, starting in 2016, employers in the 50 to 99 employee range will be subject to the same tax penalty.
The tax penalty will be $2000 per employee per year and will be a non-deductible business expense. Not surprisingly, the situation is more complicated than I have just described but there is not space here to go into all the details involved. Suffice it to say, this is an issue of great concern to many employers, especially ones who have not offered health insurance to their employees or a large segment of their employees in the past. The restaurant, hospitality and trucking industries are some common examples of industries that can expect to be adversely impacted financially by the tax penalty.
For consultation on this issue please feel free to contact me.