Some Of Your Employees Are Going To Be In Shock When They File Their Taxes

Shock Number One

Normally the health exchanges have an annual open enrollment period from November 15th to February 15th each year.  You probably heard that this has been expanded this year because so many people didn't know that if they couldn't prove they had health insurance they were going to pay a penalty(Tax).  The penalty for this year is $95 per person (half for kids) or 1.5% of your gross income over the Federal Filing Limit, whichever is greater.  For 2015 it goes to $325 (half for kids) per person or 2% of gross income over the Federal Filing Limit and in 2016 $695 per person (half for kids) and 2.5% of gross income over the Federal Filing Limit (whichever is greater).  These are going to be significant penalties.

Shock Number Two

You as an employer offer affordable minimal essential coverage to your employee.  Most, if not all, of my clients do.  The coverage must at least be comparable to a bronze plan and can't cost the employee any more than 9.5% of their W-2 Income.  Here is where the shock comes in.  You have an employee that hears that they are going to get a penalty or thinks the cost under the employer plan is too expensive.  They now decide to go check out the exchange and see what that's all about.  They sign up for coverage and get a nice subsidy based on their income.  In this case lets say they are an individual and get a $250 subsidy per month to help pay for their coverage.  Here is the problem, if your employee is offered affordable, minimal essential coverage at work, they aren't eligible for a subsidy on the exchange and will have to pay back all of those subsidy dollars.  In this case $3,000.  

Please let your employees know that they should not go to the exchange to get coverage with a subsidy for themselves unless they have have written proof from an exchange representative that they are eligible.  However, they may be eligible for subsidy's for their spouses and children as those coverages when added to their individual coverage may be unaffordable as most employers help pay for the cost of the individual not the spouses or dependents.

If your employees are eligible for Medical Assistance this is considered affordable minimal essential coverage and is allowed even if the employer offers affordable minimal essential coverage.

Please keep in mind that the IRS requires all employers to report to the IRS what employees have what coverage every year.  For employers under 50 lives, this is done at the carrier level.  

If you have any questions regarding this information please feel free to contact me at 410-239-5009.