Starting in 2016 a mandate takes effect that requires employers with 50-99 employees to start offering health coverage or they will have to pay a tax penalty. The mandate applies to employers with full time employees and full-time equivalent (FTE) employees totaling at least 50. This cannot be avoided by dividing business activities into different companies either. Companies with the same owner or that are related in general are treated as a single employer. Even if coverage is provided by the employer, the employer can still be penalized if the coverage is considered unaffordable. If the employee has to pay more than 9.66% of W-2 wages, it’s unaffordable.
Health Savings Accounts
Employers can provide health care coverage at a reduced rate if they use a Health Savings Account (HAS). This combines a high-deductible health plan (HDHP) with a savings account similar to an IRA. The IRS updates the definition of an HDHP annually so be sure to always check for new requirements.
Small Employer Health Insurance Credit
Small employers are given incentives to provide health care and a small employer is defined as having less than 25 full time employees. Small employers can reduce their tax bill dollar for dollar by half of the premiums they pay if they can meet certain requirements. The average annual wages of the employees cannot exceed $25,000 for full credit. The payroll limit is adjusted annually for inflation. You purchase coverage from a government exchange for small employers called SHOPs. You have not already claimed the credit for two consecutive years.
Whether or not the new mandate affects the employer, if they provide health coverage to employees in 2015, the employer has new requirements to adhere to. The employer has to give their employees Form 1095-B, Health Coverage, by January 31st, 2016. The employer also has to send copies to the IRS by February 29th, 2016 or March 31st, 2016 if they’re transmitted electronically to detail the 2015 coverage. Here is a link to the IRS website detailing this form. http://www.irs.gov/pub/irs-pdf/i109495b.pdf
See your tax advisor to make sure you get everything correct, especially since the tax rules are complex and continually growing.