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New IRS Pay or Play Estimator Now Available

Jun 09, 2016

HR360, Inc.
June 3, 2016

Estimator Designed Only For 2016 and Forward

The Taxpayer Advocate Service (an independent organization within the Internal Revenue Service) has developed a new tool to assist employers in understanding how the Affordable Care Act's employer shared responsibility ("pay or play") provisions work and how the provisions may apply to them.

The pay or play provisions require applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalents (FTEs)—to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax (known as the employer shared responsibility payment) if any full-time employee is certified to receive a premium tax credit for purchasing coverage through the Health Insurance Marketplace. Transition relief delayed compliance with these provisions until 2016 for ALEs with 50 to 99 full-time employees (including FTEs) that certified that they met certain eligibility criteria. For ALEs with non-calendar year health plans, this transition relief continues to apply for any calendar month during the 2015 plan year that falls in 2016.

Employer Shared Responsibility Provision Estimator
For 2016 and forward, employers can use the new Employer Shared Responsibility Provision Estimator to determine their:

  • Number of full-time employees, including FTEs;
  • ALE status; and
  • Estimated maximum amount of potential liability for the employer shared responsibility payment.

The homepage for the tool also provides definitions of key words and other various requirements under pay or play, including an overview of the provisions themselves.

Tool Provides Estimates Only
Given that the calculations provided by the tool are only estimates, employers are advised to use them only as a guide to assist in making decisions regarding their tax situation. The estimator will not report a payment estimate to the IRS or interact with individual tax returns. For more information on the pay or play provisions, please visit the IRS's Employer Shared Responsibility Provisions webpage.

Our Pay or Play section features additional toolkits and calculators for employers.

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