Jimmy Rodefer: Costs of Obamacare rising for businesses this year

Government mandates put businesses in the place of drivers filling their cars with gas when oil prices are climbing: When the cost hits a critical mass they have to make decisions on where to spend and where to cut. In 2016, businesses will see increased Affordable Care Act (Obamacare) costs. How much depends on the number of employees. Businesses will run into an extensive array of reporting and administrative requirements necessary to prove to the government that the law is being followed.

Beginning this year, employers with 50 or more employees classified as FTEs (full-time equivalents) must offer coverage to 95 percent of those employees. The offered coverage must include dependents, meaning "children" up to age 26. Spouses are not included. Employers face penalties of up to $3,240 for each employee receiving a federal premium subsidy to purchase insurance through the Affordable Care Act marketplaces. To qualify for a subsidy, an employee must have income under $47,080. If an employer fails to provide insurance at all, the penalty is $2,160 annually per employee after the first 30 are exempted. The employer mandate essentially requires an employer to offer "affordable, minimum essential" coverage that is at least equal to the government-offered insurance or pay a penalty. The IRS calls these "employer shared responsibility payments."

To help you determine your responsibility, let's run through several key terms. The definition of an FTE is an employee who's on the job for:

  • 30 "hours of service" in a week as paid according to federal wage laws.
  • 130 hours in a month (a calendar month, such as January, July, November; not a portion of a month or spread across two calendar months).

The FTE calculation has important nuances. For example, part-time workers are included, but temporary employees may be excluded. The IRS explains "minimum essential value" as: "An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan."

This is complex: the Department of Health and Human Services and the IRS have developed a minimum-value calculator for employer use, which takes into account co-pays, deductibles and coinsurance to ensure an employee's cost is less than the health-care exchange Bronze level plan. If an employee receives a credit for finding a better deal on the marketplace, the employer has a "responsibility" to pay for it. An "affordable" plan can't be above 9.66 percent of an employee's 2016 household income.

In 2015, the mandate included companies with more than 100 employees. In 2016, that requirement extends to smaller businesses.

Generally speaking, to navigate successfully through these complex regulations, businesses will need a coordinated effort between their insurance providers and tax advisors.

You may view the original article from the Knoxville News Sentinel here.

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