There is no “employer mandate” to
provide health insurance. However, the new law does have a so-called
“free-rider” provision that only applies to small businesses with more than 50
employees and begins in 2014. Here is how it works with a couple of examples:
Employers with more than 50 employees who DO NOT OFFER insurance to their
employees, but at least one employee receives a federal premium subsidy through
the new exchange will be required to pay a penalty of up to $2,000 per employee
for each employee over 30 employees.
For example, Acme Inc. does not offer health coverage to its 57 full-time
employees. Five of its employees qualify as low-income and thus receive premium
subsidies through the new Exchange. Acme will be required to pay a $54,000.00
penalty (57 employees minus 30 employees = 27 employees, multiplied by $2,000 =
$54,000).
Employers with more than 50 employees who DO OFFER insurance to their
employees, but have at least one employee receive a federal premium subsidy
through the new exchange will be required to pay the lesser of $3,000 for each
employee receiving a premium subsidy OR $2,000 for each full-time employee over
30 employees.
Using the same example as above except Acme Inc. does offer health coverage
to its 57 full-time employees. Five of its employees qualify as low-income and
thus receive premium subsidies through the new Exchange. Acme will be required
to pay $15,000 (The lesser of 1.) $3,000 X 5 employees = $15,000, and 2.) 57
employees minus 30 employees= 27 employees, multiplied by $2,000 = $54,000)
An employer must file a return providing the name of each individual for whom they provide the opportunity to enroll in coverage, the length of any waiting period, the number of months that coverage was available, the monthly premium for the lowest cost option, the plan’s share of covered health care expenses paid for, the number of full-time employees, the number of months employees were covered, if any, and any other information required by the Secretary. The employer must provide notice to employees about the existence of the exchange, including a description of the services provided by the exchange.
