Benefits and Compensation

Play or Pay? IRS issues Q&A on ACA

In the case of most employers, these requirements will be simple to implement, Simon says. But in the case of employers that are on the borderline of being covered or on the borderline of providing minimum essential and affordable healthcare coverage, the requirements can become very technical.

Some of the questions and answers are presented below. Click here to go to the full document.

What are the Employer Shared Responsibility (Play or Pay) provisions?

Starting in 2014, employers employing at least a certain number of employees (generally 50 full-time employees and full-time equivalents, explained more fully below) will be subject to the Employer Shared Responsibility provisions under the Affordable Care Act (ACA).

Under these provisions, if covered employers do not offer affordable health coverage that provides a minimum level of 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.

How do you count employees?

To be a large employer subject to these Employer Shared Responsibility 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). As defined by the statute, a full-time employee is an individual employed on average at least 30 hours per week (so half-time would be 15 hours per week).

If the employer does not have at least 50 full-time employees, the employer is not subject to Play or Pay.


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For purposes of determining whether an employer meets the 50 full-time employee (or equivalent) threshold, an employer generally will take into account only work performed in the United States.

If two or more companies have a common owner or are otherwise related, they are combined for purposes of determining whether they employ enough employees to be subject to the Employer Shared Responsibility provisions.

The rules apply to all employers, including for-profit, nonprofit, and government entity employers.

When do the Employer Shared Responsibility provisions go into effect?

The Employer Shared Responsibility provisions generally go into effect on January 1, 2014. Employers will use information about the employees they employ during 2013 to determine whether they employ enough employees to be subject to these new provisions in 2014.


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Under what circumstances will an employer owe an Employer Shared Responsibility payment?

In 2014, if an employer meets the 50 full-time employee threshold, the employer generally will be liable for an Employer Shared Responsibility payment only if:

(1) The employer does not offer health coverage or offers coverage to less than 95% of its full-time employees, and at least one of the full-time employees receives a premium tax credit to help pay for coverage on an Exchange

OR

(2) The employer offers health coverage to at least 95% of its full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an Exchange, which may occur because the employer did not offer coverage to that employee or because the coverage the employer offered that employee was either unaffordable to the employee (see below) or did not provide minimum value (see below).

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