Earlier this month, the Department of Human Services issued a rule that pushes back the financial penalties for mid-sized businesses that fail to provide employees insurance coverage. Although this rule provides greater flexibility for many employers, it has also generated considerable confusion. Crain’s Detroit Business’ Jay Greene sought to clear up some of the confusion in his article last week, and breaks down which Michigan employers will likely be impacted by this rule:
- Employers with 50-99 employees
- Employers with 100 or more qualified full-time employees
- Employers who have nontraditional types of employees
- Employers who have plan years that don’t renew on Jan. 1
As Blue Cross Blue Shield of Michigan’s Kirk Roy said in the article:
Kirk Roy, vice president of health reform with Blue Cross Blue Shield of Michigan, said the clarification on the plan start date is new. He said school systems are most affected because their plans usually start in September.
"The original rule was (Jan. 1) 2015, but if your plan year starts Sept. 1, the IRS will give you about a half year until the plan year starts," Roy said. "This is an important clarification."
Coffman said employers can look at compliance with the 70 percent coverage rule this way: Company "A" has 1,000 employees in five divisions with 200 workers in each division. But it offers health insurance to only three divisions, or 600 employees (60 percent).
To comply, a company could offer coverage to a fourth division, which would increase its coverage offering to 80 percent.
Roy said the percentage of employees offered health insurance is intended to help employers with large numbers of part-time workers.
"What is still not clear is how employers document and report this to the IRS," he said.
But penalties still could be assessed if the employer has one or more full-time employee who is a premium tax credit, Roy said. The shared responsibility payment is computed separately for each employee.
Companies still have to offer plans to employees that can't exceed more than 9.5 percent of the taxpayer's household income, Roy said.
To read the full article, visit Crain’s Detroit Business.