Final Regs on Health Care Reform Large Employer Penalties May Help Employers Who Hire Employees From Staffing Firms

As explained in my Checklist for Employers, a large employer will have to pay a subsection (a) penalty for any month if it does not offer “minimum essential coverage” (“MEC”) to substantially all (i.e., 70% for 2015 and 95% for future years) of its full-time employees and their dependents if one or more full-time employees receive a premium tax credit to help pay for coverage on a Marketplace.

For purposes of the forgoing rule, employers must take into consideration each of their common law employees. Oftentimes, employees that an employer hires from a staffing firm may be the employer’s common law employees.  Read More ›

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What the heck is MEC?

Health care reform is confusing.  There are so many new terms and concepts.  One concept that has been getting a lot of attention lately is MEC.  MEC stands for “minimum essential coverage” and is a fancy name for basic health coverage. MEC is important for two main reasons —

  • First, starting in 2014, individuals who don’t have MEC, and don’t qualify for an exemption, will have to pay a penalty tax.
  • Second, starting in 2015, large employers who don’t offer MEC to substantially all of their full-time employees and their dependents (i.e., natural and adopted children) will have to pay a nasty penalty under Code Section 4890H(a) (the “subsection (a) penalty”).
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