Federal Health Care Reform and Penalties (Part III)

More reasons for employers to avoid penalties: employee retention and tax deductions. With all the new requirements, there are bound to be penalties for those who don’t comply. However, and as stated in a previous article – the penalties for the “Pay or Play” provision that affect larger employers have been delayed until 2015.  You still have some breathing room to assess your healthcare strategies for compliance.  Just know that the penalties for No Coverage or for Unaffordable Coverage will be as follows:

Penalties for No Health Benefits Coverage or for Unaffordable Health Benefits Coverage

For large group eligible employers who elect not to offer health benefits coverage, there will be penalties assessed for failure to do so.  You would take your full-time employees and deduct 30 (that’s your freebee!), and that net number would be multiplied by $2,000.

See also: How much do you know about ACA? Take the Quiz!

For large group eligible employers who do offer health benefits coverage but it is not “affordable” or doesn’t meet “minimum value” thresholds, an additional penalty would be assessed against the large employer for all employees who go to the state or federal insurance exchange and qualify for a tax credit. The amount would be $3,000 multiplied by the number of employees who qualify for the tax credit, or the above mentioned $2,000 calculation.

Reasons to Avoid Federal Health Care and Obamacare Penalties

Now, in your search for creative ways to cut the cost of medical benefits, you may ask—why shouldn’t I just drop my employer sponsored health benefits coverage and pay the penalties?  The answer may be found from a taxable savings analysis.  The large employer penalties are just that.  They are penalties. You pay them, and you don’t get any kind of deduction on your corporate tax return. And that isn’t even considering what your competitors are doing or the value of attraction and retention of qualified employees.

Insurance premiums are still and will continue to be a cost of doing business and thereby are a direct line item deduction in operating expenses for the corporation.  It might help to have your tax accountant do a quick analysis for you.

See also: Federal Health Care Reform—It’s Upon Us (Part I)
See also: Federal Health Care Reform: Large Group Eligible Employers and Moving into Safe Harbor (Part II)

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *