Employer mandate
The employer is required to provide each full-time employee with a statement outlining their
The employer mandate requires that large
health-care offer and coverage on Form 1095-C on an annual basis. In addition, the employer
employers2 offer coverage to their employees
must file Form 1094-C with the IRS annually, and attach each Form 1095-C that has been prepared.
and their dependants. If a large employer
Failure to file these forms in a timely manner will result in information-reporting penalties.
fails to offer 95% of its full-time employees
the opportunity to enrol in MEC, it will face
Acceptable health-care coverage
penalties for failing to provide coverage.3
Acceptable health-care coverage includes US programs and eligible employer-sponsored group
When determining whether an employer is a
health plans. However, foreign group health insurance plans must satisfy specific requirements
large employer, a controlled group test applies;
in order to qualify as MEC; these requirements include the following:
note, however, that only work performed in
• The plan must be provided by an insurance company that is regulated by a foreign
the US is considered when determining
government;
whether a company meets the large employer
• The plan sponsor must notify the participants that the coverage is intended to be MEC; and
threshold of 50 full-time (or equivalent)
• The plan sponsor must file an annual return report with the IRS that details the plan and
employees. Therefore, if a foreign employer
the individuals covered under the plan (Forms 1094-B and 1095-B).
has a large global workforce, the foreign
employer would generally be exempt from
It is worth noting that Canadian universal health care is not considered MEC for US purposes.4
4-7/8”
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the employer penalties, as employees who
are living and working outside the US and
who do not have US-sourced income would
be excluded from the determination.
During the term of the assignment, it is
important to determine the identity of the
employer. Under the “common law employer”
standards, the IRS defines an employer as the
entity that has the right to control and direct
the individual who performs the services. This
is a question of fact; typically, however, the
employer will be the entity that is referred to in
the employment or secondment agreement.
US$2,000 multiplied by the number of
3
full-time employees, for any month in
which coverage is not offered. Alternatively, if the coverage offered is not affordable
and does not provide minimum value for
utah778/iStock/Thinkstock
an employee who then receives subsidized
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coverage, the penalty is 1/12 of US$3,000
each month for each such employee.
As of June 1, 2016, the United States
4
Department of Health and Human Services,
the agency responsible for approving plans
as MEC, has not approved Canadian
604.674.7801 | [email protected] | cvtrustco.com
Suite 850 – 1095 West Pender, Vancouver
universal health care.
CPABC in Focus • Sept/Oct 2016 35