Nonprofits: Are You Ready for “Play or Pay” Under the Health Care Act?

One of the most significant provisions of the Patient Protection and Affordable Care Act of 2010 will go into effect Jan. 1: shared responsibility, also known as “play or pay.”

Beginning in 2015, the health care act requires “large” employers — including nonprofits — to offer a “minimum value” of “affordable health coverage” to their full-time employees or risk a penalty if just one full-time employee receives a premium tax credit for purchasing individual coverage through one of the new affordable insurance exchanges. The rules are complex, but if you have 50 or more full-time employees — or a mix of part-time and full-time employees that’s “equivalent” to 50 or more full-timers — you should determine whether your coverage meets the requirements. If it doesn’t, you need to consider whether you want to adjust coverage to comply or risk the penalties.

If you’re a smaller organization, be aware that, also beginning in 2015, an enhanced version of the health care coverage tax credit may be available to reimburse your nonprofit for up to 35% of the health care premiums you paid. Contact us if you have questions on how either credit will affect your nonprofit.