Employer change for the healthcare law

Posted on August 22, 2011

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Employers will catch a break on the health care law’s affordability test.  Beginning in 2014, if an employer with 50 or more employees offers health insurance that is deemed not affordable, the firm will owe a tax of as much as $3,000 per year for each low- or middle-income employee who buys coverage through an exchange.  Under the law, coverage is treated as affordable if the required premium contribution from an employee does not exceed 9.5% of his or her total household income.
The affordability test will be easier to satisfy. The IRS will allow firms to base the calculation on employees’ W-2 wages, not on their household income. Business groups argued that employers know the W-2 wages, but don’t have access to household income figures. In many cases, the worker’s wages will be far lower
than total household income. So fewer employers will have to pay the penalty tax.

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