The Affordable Care Act mandate specifies that employers must offer a majority of their employees affordable health coverage. For tax year 2015, you’ll need to calculate whether 70% of your full-time employees were covered. If you haven’t offered 70% of your eligible employees with affordable healthcare coverage, you may be subject to fines.

How to Calculate Employer Shared Responsibility Payments?

The IRS calculates the fines using the following method to determine employer shared responsibility payments:

For any calendar month in 2015 or any calendar month in 2016 that falls within an employer’s non-calendar 2015 plan year, if an applicable large employer with at least 100 full-time employees (including full-time equivalents) does not offer coverage to at least 70% of its full-time employees (and their dependents), it owes an Employer Shared Responsibility payment equal to the number of full-time employees the employer employed for the month (minus 80) multiplied by 1/12 of $2,000, provided that at least one full-time employee receives a premium tax credit for that month.

For an employer with at least 100 full-time employees (including full-time equivalents) that offers coverage to at least 70% of its full-time employees in 2015, but has one or more full-time employees who receive a premium tax credit, the payment is computed separately for each month. The amount of the employer shared responsibility payment for the month equals the number of full-time employees who receive a premium tax credit for that month multiplied by 1/12 of $3,000. The amount of the payment for any calendar month is capped at the number of the employer’s full-time employees for the month (minus up to 80) multiplied by 1/12 of $2,000.

By determining whether you offered affordable health coverage to 70% of your employees on a month by month basis, you’ll be able to accurately complete your ACA filing and be prepared for any fines that result from non-compliance.

Need more information?

Our Knowledgebase is available to BoomTax customers 24/7. You can also visit these blog posts for more ACA information:

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BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.