Health reform requirements for large employers

Experts have focused much of their attention on the requirements that apply to the individual and small group market. However, companies with more than 50 employees face large penalties if they do not offer “minimum value” coverage or require excessive employee premiums.

Employers with more than 50 full-time equivalent employees are required to offer at least one health insurance plan that meets the minimum value set by the Patient Protection and Affordable Care Act (PPACA) or be subject to penalties in 2014. The non-deductible penalty for an employer with 100 employees would be at least $140,000 annually if just one of their employees receives a subsidy through the individual exchange in their state.

An additional requirement to avoid the penalties described above is that the employee's premium for the lowest cost plan that meets the minimum value should not exceed 9.5 percent of their family's income. This may be difficult to measure because the requirement is based on the family's income, but a company can verify that it meets the requirement based solely on the employee's income.

Employers who offer coverage that meets minimum value and maximum employee premium requirements should communicate how this impacts their employees. Employees of these firms, who are otherwise eligible for federal subsidies based on their income, need to know they will not be eligible for subsidized coverage.