Let’s touch
again on the latest change to ObamaCare.
You may
remember than last July, the IRS postponed the “Section 4980H
shared-responsibility penalty” to 2015. Its original effective date was 2014.
CLARIFICATION: The 4980H shared responsibility penalty is the
$2,000/$3,000 ObamaCare penalty levied on employers. The penalties apply if (1)
you do not offer health insurance or (2) the government does not consider the
health insurance you do provide to be adequate.
NOTE: This is a separate penalty from that levied on you personally
should you not carry insurance. The way ObamaCare is constructed (at least
presently), both the employer and employee can wind up paying penalties.
OBSERVATION: And these penalties will wind up on someone’s
individual or business tax return, which is why we are talking about them in a
tax blog.
On February
10, 2014 the IRS further delayed the 4980H penalty for employers having 50 to
99 full-time equivalent employees in 2014. These employers now have an
additional year – until 2016 – to offer health insurance to their employees.
I am going
to have to put up a chart on my office wall to keep track of all the delays and
changes.
Let’s recap the
“new” revised rules for employer compliance with the 4980H penalty:
(1) Employers with less than 50 full-time
equivalent employees do not have to pay the penalty or file additional reports
with the IRS - ever.
a. There has been no change for this
employer tier.
(2) Employers with 50 to 99 full-time equivalent
employees (FTEs) will have to file reports with the IRS in 2015 but will not
have to pay any penalties until 2016.
a. That is a change.
b. But … see below.
(3) Employers with over 100 FTEs have to
provide health insurance. They will also have to file reports and possibly pay
penalties in 2015.
a. But the hurdle for the penalties has
changed.
b. The new hurdle is 70% employee
coverage for 2015 and 95% coverage in 2016 and later years.
i. There is a small break here.
Then there
is something odd.
Let’s go
back to Tier 2 employers - those with 50 to 99 FTEs.
If this is
you, you will have to sign an affidavit that you did not reduce the size of
your workforce below 100 to take advantage of the additional one-year delay.
The IRS does allow you to explain yourself, though, if you did:
For example, reductions
of workforce size or overall hours of service because of business activity such
as the sale of a division, changes in the economic marketplace in which the
employer operates, terminations of employment for poor performance, or other
similar changes unrelated to eligibility for the transition relief provided in
this section XV.D.6 are for bona fide business reasons and will not affect
eligibility for that transition relief.”
Tier 2 employers will be required to maintain a “comparable” level of health benefits as existed on February 9, 2014 in order to obtain relief.
OBSERVATION: Interestingly, if the Tier 2 employer
did not offer health insurance on February 9, 2014, then this requirement is
automatically met.
So … you
will have to sign a form saying it was not the president’s fault that people
lost their jobs.
I suppose it will be the tooth fairy’s fault.
