Employers with 50 to 99 full-time employees will not be subject to penalties under the Employer Mandate of the Affordable Care Act (“ACA”) for failing to provide health insurance coverage to employees in 2015. On Monday, the Department of the Treasury and the Internal Revenue Service announced finals rules (the “Final Rules”) granting temporary relief from the Employer Mandate, pushing back the compliance date for these mid-sized employers until 2016.
The Employer Mandate generally requires large employers (those with 50 or more full-time employees) to provide employee health insurance coverage that meets minimum value and affordability standards under the ACA or pay penalties, called employer shared responsibility payments. Previously, employers needed to be compliant with the Employer Mandate by 2015. The Final Rules state that employers with 50 to 99 full-time employees who submit an appropriate certification described in the Final Rules will not need to be compliant until 2016.
Additionally, employers with 100 full-time employees or more need only offer coverage to 70% of their full-time employees in 2015 to be compliant with the regulations—this marks a decrease from the 95% offer of coverage that was originally required. For 2016 and beyond, employers must still offer coverage to 95% of full-time employees for compliance. The stated purpose of these changes is to “ensure a gradual phase-in and assist the employers to whom the policy does apply.”
Other highlights from the Final Rules:
The Final Rules clarify whether certain employees (volunteers, educational employees, seasonal employees, student work-study employees, and adjunct faculty) are considered full-time employees for the purposes of the Employer Mandate.
The Final Rules allow employers to use an optional look-back period (described in December 2012 proposed regulations) to determine employee status (i.e., whether an employee is considered full-time) as well as clarifying this method of calculation.
The Final Rules provide safe harbors to the ACA’s affordability standards—employers are permitted “to use the wages they pay, their employees’ hourly rates, or the federal poverty level in determining whether employer coverage is affordable.”
The Final Rules extend certain transitional relief previously granted for the year 2014, for example, employers with non-calendar plan years will have to comply with the Employer Mandate at the start of their plan year in 2015, not January 1, 2015.
The implementation of the ACA’s provisions has been constantly in flux. These Final Rules are just the latest in a wave of delays that have plagued the ACA’s rollout (this marks the second time the Employer Mandate has been pushed back in addition to provisions relating to the Individual Mandate being delayed). With future guidance promised by the Department of Treasury and the Internal Revenue Service regarding employer information reporting, this is likely not the last change affecting the Employer Mandate.
The Health Law Gurus™ will continue to follow the implementation of the Employer Mandate and other provisions of the ACA.
We encourage you to share your experiences and thoughts about the Employer Mandate and ACA delays with us and our readers in the comments section below.
To view the Department of Treasury’s fact sheet, click here.
The Final Rules will be published in the Federal Register later today.