Playing Kick the Can with the Affordable Care Act: The Administration Further Delays Employer Deadlines

The Treasury Department has announced further extensions for medium-sized and large-sized employers for compliance with the “employer mandate” of the Affordable Care Act (“ACA”). The employer mandate requires employers with a threshold level of employees to provide affordable health insurance to 95% of their full-time employees. Under the ACA, a full-time employee is defined as any employee who works on average 30 or more hours per week. “Affordable health insurance” is defined as insurance where the employee’s premiums are no more than 9.5% of an employee’s household income, and requires employers to pay for the equivalent of 60% of the actuarial value of an employee’s health insurance coverage. The employer mandate was originally drafted to penalize employers who did not comply with the mandate by January 1, 2014, with a fine of up to $2,000 for each employee not offered coverage.

This past July, the January 1, 2014 deadline for employers to offer affordable health insurance to 95% of employees (in order to avoid the penalty) was postponed until January 1, 2015. The Treasury Department announced additional extensions and alterations to the 2015 deadline earlier this month. Specifically, medium-sized employers (defined as employers with 50 to 99 employees) will now be given until 2016 to offer affordable health insurance to at least 95% of their full-time employees. Large employers, defined as employers with 100 workers or more, are now only required to offer affordable health insurance to 70% of their full-time employees by 2015. To avoid penalties, large employers must offer affordable health insurance to 95% of their full-time employees by January 1, 2016. These extensions do not affect small employers, employers who employ less than 50 employees, as the ACA does not require small employers to offer health insurance.

The Treasury Department explained that the extensions and alterations are a way to give employers a little more time to adjust to the new requirements of the ACA. In furtherance of this goal, the Administration clarified some issues relating to part-time and volunteer employees with a rule released on February 10, 2014. The rule states that volunteer firefighters, part-time teachers and adjunct professors who teach less than 15 hours per week will not be included in the definition of “full-time employees.” However, teachers who work full-time during the school year do count as full-time employees, even if they do not work during the summer.

While this rule provides guidance to some questions, numerous questions remain relating to employer requirements under the ACA. Administration officials stated that they will issue a set of rules addressing additional employers’ questions in the coming weeks. An issue likely to be addressed in the rules is a question relating to retail employees who normally work less than 30 hours per week. Retail employers do not know whether part-time employees who work increased hours during the holidays (that under the ACA calculations will be considered to work on average more than 30 hours per week) will count as full-time employees. Spilman Thomas & Battle, PLLC will provide a summary and explanation of these rules as soon as the rules are released.

 

Topics:  Affordable Care Act, Employee Definition, Employer Mandates, IRS, Pay or Play, Shared Responsibility Rule, Transition Relief, U.S. Treasury

Published In: Health Updates, Labor & Employment Updates, Tax Updates

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.

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