The Affordable Care Act, also called Obama Care, ACA, PPACA (for Patient Protectionand Affordable Care Act), and health care reform, has caused a lot of frustration and confusion for employers. Shifting implementation timelines, the employer shared
responsibility provision, and serious processing backlogs have left a lot of people with questions.
What is the Employer Shared Responsibility?
The Employers Shared Responsibility provision refers to a payment requirement of
some businesses with more than 50 employees who don’t offer insurance or when their
coverage doesn’t meet minimum standards.
The Employer Shared Responsibility provision is actually a penalty for not providing
at least the minimum coverage by 2015 to a workforce of 50 or more, up to 100,
employees, and larger workforces over 100. There are considerations for seasonal
employees and workforce fluctuations. The provisions apply equally to for profit and not-
When Do Employers have to Pay the Employer Shared Responsibility?
Employers were originally required to make the employer shared responsibility
payments for 2014 but that was extended a year and enforcement won’t begin until
January 1, 2015 for employers with 100 or more full-time employees. Employers with
50 to 99 employees have until 2016 if they meet certain conditions.
The employers who want to wait to make the ESR payment must not reduce their
workforce size or hours after February 9, 2014 to stay under the 100-employee rule or
eliminate or reduce health coverage offered as of the same date. They have to certify
these requirements are met in the ESR reporting or be subject to penalties.
Final guidance from the Treasury Department on this reporting includes a requirement
to provide information about whether employees and their families were offered
minimum essential coverage insurance. This information is provided on Forms 1094-C
and 1095-C, and some simpler reporting methods are available.
When Do Employers Have to File ESR Reporting?
Reporting for ESR is similar to the process for W-2’s and W-3’s. Beginning with
the calendar year 2015, employers with 50 or more full time and full time equivalent
employees have to file Forms 1094-C and 1095-C with the IRS every year by
February 28 or by March 31 electronically for the previous year. In addition, they must
provide Form 1095-C to their employees by January 31. While employers with 50-99
employees are not required to pay the penalty for non-compliance in 2015, they are still
required to complete reporting or face a penalty.
Identification of Full-Time Employees
The total number of full-time and full time equivalent employees is used to determine
whether the ESR payment applies to the employer. An employer must indentify its full-
time and full-time equivalent employees based on their hours of service, or how many
hours they work. Full-time employees are those who work at least an average of 30
hours of service per week, or 130 hours in a calendar month.
Attention to these filing and reporting requirements will help avoid penalties and fees
and other complications with IRS and ACA requirements.
Contact PAYDAY for more assisstance on employer responsibility.