Affordable Care Act “Play or Pay” Rules Kick In

Is your nonprofit ready to comply with Affordable Care Act (ACA) requirements that take effect in 2015? If you’re an “applicable large employer” — generally those employers (nonprofit and private) with an equivalent of 50 or more full-time employees — you’ll be subject to the employer shared responsibility provision, or “play or pay” rules,
starting Jan. 1.

Under the ACA, a large employer is one with at least 50 full-time employees or a combination of full- and part-time employees equivalent to at least 50 full-time employees. (For 2015, you may be eligible for transitional relief increasing that number to 100.)

Determining whether you’re a large employer involves totaling part-time employees’ monthly hours and dividing that figure by 120 to calculate your full-time equivalent employees (FTEs). That figure is added to the total number of actual full-time employees, generally those employed on average at least 30 hours a week, or 130 hours in a calendar month.

A penalty can be imposed on large employers that don’t offer “minimum essential” health care coverage to at least 95% of full-time employees (70% in 2015) — or that offer coverage that isn’t “affordable” or doesn’t provide at least “minimum value.”

The penalty applies only if one or more of the nonprofit’s full-timers receive a premium tax credit for a qualified health plan through a state or federal health insurance marketplace. If the employer doesn’t offer minimum essential coverage, the penalty is $2,000 per year per full-time employee in excess of 30 full-time employees (80 in 2015). The monthly amount owed is capped at 1/12 of $2,000 times the number of full-time employees over 30 employees (over 80 in 2015). If minimum essential coverage is offered but it isn’t affordable or doesn’t provide minimum value, that same penalty applies or, if less, a penalty of $3,000 per full-timer receiving a premium tax credit.

Contact us for further information on this and other ACA requirements for 2015, including the transitional relief provisions.

© 2014