The IRS noted that employers may rely on the proposed regulations for guidance until final regulations are issued. In addition, the IRS posted a questions and answers document on its Web site Friday to explain the Employer Shared Responsibility provisions under the Affordable Care Act and the new proposed regulations.
Under the provisions, if employers do not offer affordable health coverage that provides a minimum level of health insurance coverage to their full-time employees, they may be subject to an Employer Shared Responsibility payment if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges.
Businesses that do not provide health insurance coverage may be subject to a penalty of $2,000 per employee per year if over 30 employees are subsidized by the tax credits. Employers need to provide “affordable” coverage that does not cost a single employee over 9.5 percent of their income, although the amount may be more for family coverage.
In order to be subject to the provisions, an employer must have at least 50 full-time employees, or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees). A full-time employee is considered to be an individual employed on average at least 30 hours per week. Half-time would be 15 hours per week.
Notice how many hours it takes to qualify as a “full time” or “half time” employee. This is why you will see firms cut hours to get under the requirements and this in turn will hurt employee’s paychecks. Watch and see if the unemployment rate starts to fall as these firms cut individual hours and hire more part timers.