Thomas J. Nichols
We all know that the critical provisions under the Affordable Care Act go into effect next year. This includes the so-called Employer Mandate requiring applicable large employers (i.e. those with 50 or more employees) to provide minimum essential coverage for all of their full-time employees that is both affordable and provides minimum value. However, did you know that some critical determinations as to how this new Employer Mandate will apply to your organization will be based on what happens during this calendar year?

In particular, whether your organization is an “applicable large employer” for purposes of calendar year 2014 will be based on how many full-time equivalent employees it is deemed to have during this year. Moreover, your employees’ status as full-time and eligible could also be determined on the basis of the work they perform during this year. This means that employers, especially those close to the 50-employee limit, should be doing their planning now, and in some cases, during the first half of this year.

All this planning could be important, because the Employer Mandate penalties can be quite substantial. For example, an employer with only a hundred employees could be subject to annual penalties totaling $140,000.

As you can imagine, clients also need to start thinking about a number of other provisions in the Affordable Care Act. For example, if you have a Medical Reimbursement Plan that covers a portion of deductibles and co-pays under your health insurance plan, you are supposed to file a Form 720 (Quarterly Federal Excise Tax Return) by July 31, 2013 and pay a fee of $1.00 per covered employee to help fund the Patient-Centered Outcomes Research Institute (though this fee will be at least $2 in future years).

TAX ADVICE LIMITATION: To ensure compliance with the requirements of Circular 230, we inform you that any tax advice contained above is not intended or written to be used and cannot be used (i) by any taxpayer for the purpose of avoiding penalties that may otherwise be imposed under the Internal Revenue Code or (ii) by anyone for the purpose of promoting, marketing or recommending to another party any entity, investment plan or arrangement addressed herein.