Final regulations issued on February 12, 2014 contain significant new relief from the employer mandate’s shared responsibility penalty under the Patient Protection and Affordable Care Act for 2015.  Previous guidance delayed application of the employer penalty from 2014 to 2015.

Under this new relief, employers with 100 or more full-time employees (including full-time equivalents) in 2014 will have to pay the employer shared responsibility penalty for 2015 (and for non-calendar-year plans, any calendar months during the 2015 plan year that fall in 2016), only if the employer:

  • Does not offer health coverage;
  • Offers health coverage to fewer than 70% of its full-time employees and their dependents, and at least one of the full-time employees receives a premium tax credit for coverage in the public marketplace; or
  • Offers coverage to 70% or more of its full-time employees and their dependents, and at least one of the full-time employees receives a premium tax credit for coverage in the public marketplace, which may occur because the employer did not offer coverage to that employee or because the coverage the employer offered was either unaffordable or did not provide minimum value. 

After 2015, 95% will be substituted for 70% above, as originally provided in the employer mandate rules.

In addition, employers with at least 50 but fewer than 100 full-time employees (including full-time equivalents) in 2014 will not have to pay the employer shared responsibility penalty for 2015 (and for non-calendar-year plans, any calendar months during the 2015 plan year that fall in 2016) if the employer:

  • Employs on average at least 50 full-time employees (including full-time equivalents) but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014;
  • Does not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief during the period beginning on February 9, 2014 and ending on Dec. 31, 2014; and
  • During the period beginning on February 9, 2014 and ending on Dec. 31, 2014 does not eliminate or materially reduce the health coverage, if any, offered as of February 9, 2014.

The employer mandate does not apply to employers with fewer than 50 full-time employees (including full-time equivalents). 

Written by:

Published In:

Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Poyner Spruill LLP | Attorney Advertising

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