Insurance News


Employers have much to think about nowadays in addition to running their businesses. While Health Care Reform (PPACA) passed in 2010, to add to the confusion many of the changes the law created have been delayed or amended. Employers who fall under the mandate will have new reporting requirements and potential penalties. Small employers may consider the benefits of purchasing in the SHOP exchange where they may qualify for the small business tax credit or disbanding their group plan and having employees purchase individual coverage potentially getting subsidies for premium and cost sharing expenses. Glandon Insurance can help you with exploring your options, keeping you in compliance or when considering self insurance.

Pay or Play (Employer Shared Responsibility)

The employer shared responsibility provisions (also known as “pay or play”) require large employers—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs)—to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax if any full-time employee is certified to receive a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace (Exchange).

The “pay or play” requirements are delayed until 2016 for employers with 50 to 99 full-time employees who certify that they meet certain eligibility criteria related to workforce size, maintenance of workforce and overall hours of service, and maintenance of previously offered health coverage.

 Employer Liability for the Pay or Play Penalty

For 2016 (and, if applicable for employers with non-calendar year plans, any calendar months during the 2016 plan year that fall in 2017), an employer who is subject to the “pay or play” requirements will be liable for a penalty only if:

  • The employer does not offer health coverage or offers coverage to fewer than 70% of its full-time employees (and their dependents, unless transition relief applies), and at least one full-time employee receives a premium tax credit; or
  • The employer offers health coverage to at least 70% of its full-time employees (and their dependents, unless transition relief applies), but at least one full-time employee receives a premium tax credit, which may occur because the employer did not offer coverage to that employee or because the coverage the employer offered that employee was either unaffordable to the employee or did not provide minimum value.

After 2016, 95% should be substituted for 70% in the bullets above.

Small Business Health Care Tax Credit

Certain small businesses and tax-exempt employers that pay at least half of the premiums for employee health insurance coverage may be eligible for the small businesses health care tax credit. For tax years 2010–2013, the maximum credit is 35% for small business employers and 25% for small tax-exempt employers. For tax years beginning in 2014 or later, the maximum credit increases to 50% of premiums paid for small businesses and 35% of premiums paid for small tax-exempt employers.

For a quick look at the Small Business Tax Credit and eligibility:

Small Business Tax Credit Calculator