Part of Employer Mandate Delayed

February 12, 2014

The employer mandate has been considered a keystone of the Affordable Care Act (ACA). In the legislation passed by Congress, the employer mandate, also referred to as the employer shared responsibility, required "large employers" to provide affordable health insurance for their full-time employees or be subject to certain financial penalties. ACA required employers with 50 or more full time equivalent employees to comply with this requirement beginning January 1, 2014. However, the Obama administration delayed the employer mandate until January 1, 2015.

Now, another change in the implementation of the ACA has occurred. On February 10, 2014 the Treasury Department and the Internal Revenue Service (IRS) announced that employers with 50 to 99 full-time equivalent employees will not be subject to the employee mandate assessments until January 1, 2016. The "pay or play" mandate for employers with 100 or more full-time equivalent employees is still effective January 1, 2015.

Companies with 50 to 99 employees will report on their workers and coverage in 2015, but have until 2016 before any employer responsibility payments could apply. These employers must certify that they meet the following conditions:

Limited workforce size employs on average at least 50 full-time equivalent employees but fewer than 100 full-time equivalent employees during 2014.

Maintenance of workforce and hours of service during the period Feb. 9, 2014 until Dec. 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief.

Maintenance of previously offered health coverage during the period Feb. 9, 2014 until Dec. 31, 2015, the employer does not eliminate or materially reduce the health coverage it offered as of Feb. 9, 2014.

Companies with 100 or more full-time equivalent employees were also provided some relief in the announcement. To avoid payment for failing to provide health coverage, these employers need to offer coverage to at least 70 percent of their full-time employees (as defined by ACA) in 2015 and 95 percent in 2016 and beyond. This helps employers who may offer coverage to employees with 35 or more hours, but not yet to that portion of their workforce who work 30 to 34 hours.

It should be noted that the Treasury Department announcement stated the following: "As these limited transition rules take effect, we will consider whether it is necessary to further extend any of them beyond 2015.

SESCO will continue to monitor developments in health care reform to include compliance as well as recommendations for employers on best practices for their firms.

SESCO is also counseling employers onsite, conducting webinars for associations and chambers of commerce and subsequently is available to support your company's efforts in understanding, preparing for, and complying with this regulation.

If you have questions about this change, please contact Phil Richards, Director of Client Services, at phil@sescomgt.com or 423-764-4127.