A version of this article was published in The Daily Record on March 31, 2015.
Q1 Our company offers health care coverage to employees. Are our employees eligible for health care coverage under the so-called "Obamacare" Health Care Exchanges, such as MarylandHealthConnection.gov or the federal exchange, HealthCare.gov? Yes. Generally speaking, everyone is eligible to obtain coverage on Health Care Exchanges that are on the internet. However, individuals who have access to health care coverage from their employer might be disqualified for premium tax credits.
Q2 Is there a deadline for individuals to purchase health care coverage on an Exchange? Yes. Similar to employer-based coverage, there is an "Open Enrollment" period for purchasing health care coverage on an Exchange. To enroll in non-group health plan coverage for 2015, the Open Enrollment period began November 15, 2014, and it ends on February 15, 2015. Once the Open Enrollment period ends, individuals and families are no longer able to enroll in health plans on the Exchange until the next Open Enrollment period. That said, upon certain changes in circumstances during the year, certain individuals will have a special 60-day opportunity to enroll through an Exchange, outside of the Open Enrollment period.
Q3 Who is eligible to receive the premium tax credit? Individuals who meet the following three requirements are eligible to receive the premium tax credit, which may be used to purchase health care coverage on an Exchange: (1) income not greater than 400% of the federal poverty level, (2) not eligible for coverage through a government-sponsored program like Medicaid or CHIP, and (3) not eligible for affordable coverage providing minimum value that is offered by an employer.
Q4 Is our company required to offer health care coverage? No, employers are not required to offer health care coverage.
Q5 Is there a penalty if our company does not offer health care coverage for 2015? If your company had less than 50 full-time employees (or a combination of full-time and part-time employees that is equivalent to less than 50 full-time employees) throughout 2014, it is not subject to the federal tax penalties for not offering coverage. A full-time employee is one who works, on average, at least 30 hours per week. There are also special rules for employees whose hours vary during the year or work on a seasonal basis. If, however, your company had more than 100 full-time employees (or a combination of full-time and part-time employees that is equivalent to 100 or more full-time employees) throughout 2014, the answer may be different. Beginning in 2015, these "large" companies may be liable for the Shared Responsibility payment.
Q6 What are Shared Responsibility payments, also known as the Obamacare tax? Companies with more than 100 full-time employees that do not offer health care coverage may be liable for a tax that is equal to the number of full-time employees who were employed for the year (minus up to 30) multiplied by $2,000. This tax becomes due if at least one full-time employee receives the premium tax credit. For example, if your company had 101 full-time employees in 2014, did not offer health care coverage, and one of your employees receives a premium tax credit for health care coverage that is purchased on an Exchange, the Shared Responsibility payment is $142,000.
Q7 My company had more than 50 but less than 100 employees during 2014 and does not offer health care coverage. Is it liable for the Shared Responsibility payments? Some employers who had more than 50 but less than 100 employees (including full-time equivalents) during any consecutive six-month period in 2014 will be eligible for transition relief from the Shared Responsibility payments in 2015. The additional requirements for the transition relief are as follows. During the period beginning on February 9, 2014, and ending on December 31, 2014, the company may not have reduced the size of its workforce or the overall hours of service of its employees for other than bona fide business reason(s). In addition, during the period beginning on February 9, 2014 and ending on December 31, 2015, the company must not have eliminated or materially reduced any health coverage offered as of February 9, 2014.
Q8 My company has more than 100 employees. Will it be exempt from the Shared Responsibility payments if it offers health care coverage for 2015? Not necessarily. The Shared Responsibility payment rules may still apply to such large companies that provide health care coverage. This is an extremely complex subject, and the answer depends on whether the coverage is good enough according to federal criteria. The criteria relate to the type of coverage the employer provides and how much the employee must pay for the coverage. Generally speaking, if coverage is not "good enough", then an employee may receive a premium tax credit, and the company may be liable for a Shared Responsibility payment for that employee. The payment is $250 per month per employee receiving the premium tax credit. The amount of this payment for any calendar month is capped at the amount the employer would pay if it offered no coverage to any employee.
Q9 If my company offers health care coverage to employees, must it offer coverage to spouses? No, companies are not required to cover health care coverage for their employees' spouses, but generally, companies must offer to cover the employees' dependents to be exempt from the Shared Responsibility payments.
Q10 Are there any significant legal cases that are pending in the courts? Yes, the U.S. Supreme Court has agreed to hear a case that has been brought by a group challenging the Shared Responsibility payments. The case alleges that Shared Responsibility payments cannot be collected from employers in states that have not created a health care Exchange. The State of Maryland has created its own Health Care Exchange, so the direct consequences of any ruling by the Supreme Court may not be as significant in Maryland as it might be in other jurisdictions, such as Pennsylvania and Virginia, which do not have their own health care Exchanges.