If an employer comes under the Employer Shared Responsibility provisions, then the he or she needs to prove at least the minimum level of health coverage to their full-time employees (and their dependents). The employer may need to make a payment for Employer Shared Responsibility if at least one of its full-time employees receives a premium tax credit for buying individual coverage from the Health Insurance Marketplace.
Only large businesses with more than 50 full-time or full-time equivalent employees that meet certain specifications are subject to the Employer Shared Responsibility provisions. More than 95 percent of the employers do not fulfill the ALE requirements because of the size of their business.
Beginning in 2015, employers with 100 or more full-time or full-time equivalent employees will be required to offer health coverage to their full-time employees and their dependents. Alternatively, they may pay the Employer Shared Responsibility payment.
Beginning 2016, all ALE employers will need to report to the IRS the health care coverage that they are providing to their full-time employees for the previous year. For 2016, the ALE employers will need to report for the year 2015. For the year 2014, the reporting is voluntary.
From 2015 to 2016, the Employer Shared Responsibility provisions will be phased in for smaller ALEs. Those employers who have less than 25 full-time equivalent employees can confirm if they qualify for the small business health care tax credit.