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23676049One of the most important issues employers will be facing under the Affordable Care Act (ACA) is the employer “free rider penalty”, also referred to as the “pay or play” rules.

The ACA imposes a tax on employers if they do not offer health care coverage to all of their full-time employees and dependents.  In addition there are guidelines for what type of coverage must be provided.

The pay or play rules will go into effect on January 1, 2014 for all employers who have on average, at least 50 full-time employees during the previous calendar year (2013). This is precisely why it is important for all employers to look at how their benefit programs are structured right now.

We do need to remember that there is no mandate for employers to provide health insurance coverage to their employees.  Employers who do not “play” will simply “pay” a tax instead.  Each employer will have to weigh the tax burden with the cost of insurance to determine what employee groups they will “play” and which they will “pay” for.

If your company has fewer than 50 employees, you may not be impacted by the “Pay or Play” requirements, but there is more change on the horizon for 2014 and it is important to remain informed.

The IRS has published  FAQ’s on the “Pay or Play” Requirement which has more in-depth information on counting employees, especially in unique circumstances, and explains how affordability and minimum value will be calculated.

Since each employer is structured uniquely, we encourage all business owners to seek expert advice on how they can structure their benefit plans now in order to minimize the consequences in 2014.  We are happy to provide a referral to a qualified benefit consultant.

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