Employee shared payment refers to the amount of health insurance compensation companies are required to provide their employees. However, did you know that not every business is required to do so?
How to know if you’re responsible for Employee Shared Payment?
Only large employers are obligated to adhere to the employee shared payment provisions. Large employers, as defined by the government, are companies that contain 50 or more full-time employees. This definition applies to all types of organizations, even non-profits. It is important to adhere to the provisions if the IRS informs you that your organization is responsible for providing healthcare, because failure to comply could carry stiff penalties.
How does the government define a full-time employee?
The government defines full-time employees as those who work an average of 30 or more hours a week or perform the equivalent amount of work.
Is there any other way to be exempt from this obligation?
Yes. If one of your employees decides to enroll themselves in their own personal healthcare coverage plan, then your organization is not responsible for their healthcare coverage.READ MORE: First Lady Jill Biden To Visit Royal Oak On Friday
Who receives employer shared payment?
If the IRS determines you are required to follow the employer shared payment provisions, you will be required to provide health insurance assistance for both full-time employees as well as their dependents. Dependents are defined as individuals that have not yet reached the age of 26.
How much do companies owe their employees under the Employer Shared Payment provisions?
There are two possible scenarios for employers that will affect how much is owed under the employer shared payment provisions:
- If an employer that is obligated to adhere to employer shared payment provisions fails to meet the minimum requirement for 95 percent of their employees, then that employer will be required to pay $2,000 for each full-time employee, regardless of whether they are covered by the employment shared payment plan or another independent health coverage plan. The steep penalties associated with this failure to obey guidelines provide a substantial incentive for companies to cover payment.
- If an employer that is obligated to adhere to the employer shared payment plan offers the minimum required coverage for at least 95 percent of its employees, then that company is only required to pay $3,000 for each employee that either opted for private insurance through the marketplace or was excluded from the 95 percent of covered employees.
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This article was written by Marie Flounoy for CBS Small Business Pulse.