The affordable care act: what employers need to know for 2016.

• Author: Curtice, Melanie K.
• Position: Legal Speak

Under the Affordable Care Act, also known as the ACA or Obamacare, an employer with at least fifty full-time employees must offer them health coverage that meets certain standards or risk paying assessable payments to the IRS. Starting in 2016 employers must report that coverage to employees and the IRS on Forms 1094 and 1095, which is one way the IRS will determine the assessable payments. And if this wasn't enough, Congress just passed the Protecting Affordable Coverage for Employees or "PACE Act," amending the ACA allowing states to define a large employer as one with more than fifty employees, not one with up to one hundred employees.

The time for employer shared responsibility penalties, or "assessable payments" as the IRS refers to them, is finally here. Note that most of us would refer to penalties as "taxes," but we don't because the US Supreme Court taught us in NIFB v. Sibelius that there is a difference between taxes and penalties.

Under the Affordable Care Act, also known as the ACA or Obamacare, an employer with at least fifty full-time employees must offer them health coverage that meets certain standards or risk paying assessable payments to the IRS. Starting in 2016 employers must report that coverage to employees and the IRS on Forms 1094 and 1095, which is one way the IRS will determine the assessable payments. And if this wasn't enough, Congress just passed the Protecting Affordable Coverage for Employees, or "PACE Act," amending the ACA allowing states to define a large employer as one with more than fifty employees, not one with up to one hundred employees.

Without the PACE Act, the ACA's original requirement that states define small employers as having one hundred or fewer employees would have been effective on January 1, 2016. This change is related to state insurance rating and coverage requirements and is separate and distinct from the requirement to provide coverage or pay a penalty. In other words, the PACE Act really has nothing to do with the assessable payments that may be due; it has to do with the coverage that small employers provide to their employees. Confusing? Yes. Here's what everyone needs to know.

Assessable Payments under Employer Shared Responsibility

Starting January 1, 2015, any employer with at least one hundred full time employees must offer minimum essential coverage, or MEC, to employees in order to avoid assessable payments. For new full-time employees, employers must offer MEC to them by the...