Many residents of the United States are familiar with the Patient Protection and Affordable Care Act (or PPACA), commonly referred to as ObamaCare. The law goes into effect today, Oct 1st, 2013. The range of views on the law, its legality and morality has sparked a ferocious debate from the day the law was passed, almost 3 years ago.
Regardless of where the debate stands today, one thing is certain – today is a big day for many Americans.
The PPACA mandates that all citizens of the United States must be covered by health insurance starting January of 2014. This includes 46 million Americans citizens who are not currently covered.
As a result of this mandate, the government is granted the authority to regulate specific tax laws. However, this ruling does not merely apply to health insurance coverage. The mandate applies to several related areas that include nonprofits. When considering this ruling, it is important to remember that many nonprofits depend greatly on tax breaks and tax-exempt status’ to encourage the contribution of supporters.
Although there are not specific requirements for employers to offer health insurance, there are penalties under the PPACA’s “shared responsibility” provision for employers with 50 or more full-time employees. Ultimately, the changes in the law can lead to strict consequences for an employer attempting to help those in need.
Essentially, the “shared responsibility” provision asks nonprofit employers to begin counting employees. For employers with more than 50 employees, The Affordable Care Act enforces a “pay or play” requirement. This requirement ensures that either the employer provides a minimum level of coverage or the employer pays a monetary penalty for non-coverage. It is important to note that this requirement is only applicable to employers with a minimum of 50 full-time employees. For that reason, many of the smaller nonprofit employers are not concerned with being in compliance of The Affordable Care Act.
In any event, after the nonprofit grows to more than 50 employees, it would be sensible to become acquainted with the PPACA’s more comprehensive legal requirements. For most employers, there is a small window to creatively interpret the law’s requirements. Perhaps, the idea that the tax penalty for noncompliance is not deductible may increase the incentive to comply.
For many of the nonprofit employers that employ less than 50 full-time employees, offering health insurance coverage remains a valued, yet legally voluntary employee benefit. Many nonprofits, mainly those in the 50-200 employee range, need to become more observant of how the “play or pay” requirements will affect their organization. Nonprofits that continue to rely on tax breaks and exempt status should pay close attention to the change in the laws. The penalties may be strict and are not deductible. Therefore, in order for nonprofits to help employees in need, they need to fully understand the requirements of The Patient Protection and Affordable Care Act.
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