Recently Released Regulations Alter the Affordable Care Act’s Employer Mandate Provisions Yet Again

By: Christian P. Jones

In February, the United States Treasury Department issued final regulations implementing the employer mandate provisions under the Affordable Care Act. The mandate, which requires employers with 50 or more employees to offer health insurance to their workers or face penalties for non-compliance, were originally planned to take effect at the start of 2014.

In July of 2013, the Obama administration announced that the effective date for the employer mandate would be delayed until January 1, 2015. The final regulations issued in February alter the mandate requirements once more.  The key changes are as follows:

Employers with 50 to 99 Full-Time Employees
For these medium-sized employers, the mandate has been delayed an additional year. It now takes effect in 2016. Employers looking to take advantage of this exemption will need to certify to the federal government that they are not cutting employees simply to fall below the 100 employee threshold.

Employers with 100 or More Full-Time Employees
Previously, these large employers were required to offer qualified health care coverage to at least 95 percent of their full-time employees and their dependents in order to comply with the employer mandate. The final regulations provide a one-year relaxation of that requirement. This means that in 2015, employers with 100 or more employees must offer coverage to 70 percent of their employees to be counted as fulfilling the employer mandate. This is a short-term measure only, and by 2016, large employers will need to meet the original 95 percent requirement.

Other Important Clarifications
The final regulations clarify that bona fide volunteers for a government or tax-exempt entity, such as volunteer firefighters and emergency responders, will not be considered full-time employees. Similarly, seasonal positions for which the customary annual employment is six months or less, will not be considered full-time. Teachers and other educational employees will not be treated as part-time simply because their school is closed or operating on a limited schedule during the summer.

If employers have not already done so, they should perform an accurate accounting of their full-time or full-time equivalent employees pursuant to the Affordable Care Act, so that they can ensure they are adhering to the appropriate timeline.

Those with more than 50 but less than 100 full-time employees have additional time to take the necessary steps toward compliance with the employer mandate. Those with 100 or more full-time employees should promptly ensure that they are prepared to provide health insurance coverage to at least 70 percent of their full-time employees in 2015.

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