The “Pay or Play” provision applies to Applicable Large Employers (ALEs) with an average of at least 50 full-time employees, including full-time equivalents (FTEs), working at least 30 hours per week on business days during the preceding calendar year. Essentially, ALEs may “Pay” a penalty if they do not “Play” by the rules of offering minimum essential coverage (MEC). With all of HMAA’s medical plans meeting or exceeding the MEC standard and Hawaii’s Prepaid Healthcare Act in effect, the Pay or Play provision has minimal impact on Hawaii employer health coverage, but it includes certain reporting requirements. Beginning with the 2015 plan year, ALEs must report health coverage offered on an informational return to the IRS, as well as furnish coverage statements to applicable individuals. A tax penalty will be assessed to ALEs that fail to provide minimum essential coverage to 70% of their full-time employees and eligible dependents up to age 26. For the 2016 coverage year and beyond, the requirement increases to 95%.
View the following fact sheets for additional information:
ACA Employer Shared Responsibility
IRS Reporting for Employer Shared Responsibility