Worker Classification Impacts ACA Excise Tax

doctor on telephoneFrom JDSupra Business Advisor, Maura Corrigan of Cohen & Company offers a reminder that the Affordable Care Act (ACA) presents additional risks if workers are not properly classified as employees or independent contractors.  She writes:

“By way of example, ABC Company employs 250 full-time employees. It also treats 50 full-time individuals as independent contractors. It offers 185 of the 250 full-time employees health care coverage, so they meet the 70% threshold in place for 2015. However, the government may find that 40 of the 50 independent contractors are really employees and, as a result, the business has only covered 64% of its total full-time workforce (185 divided by 290). This employer would be subject to a $2,000 per full-time employee non-deductible shared responsibility payment of $580,000 in 2016 if at least one employee secures a premium tax credit on the state exchange….”

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