Regulations issued this week once again delay, for some employers, the requirement to offer health coverage to all full-time employees.
The Affordable Care Act, when initially drafted, required businesses with 50 or more employees to offer affordable health coverage to their full-time employees beginning January 1, 2014 or pay a penalty. Last July, the so-called “employer mandate” or “pay or play penalty” was delayed to 2015. Businesses with under 50 full-time employees were never subject to the employer mandate.
These new regulations give some businesses an extra year to comply, and allow a two-year phase in for other businesses.
Mid-size employers with 50 to 99 workers now have until 2016 before they will be subject to a penalty for not providing affordable health coverage to their full-time employees. Employers with 100 or more workers can avoid a penalty by offering affordable health coverage in 2015 to 70 percent of their full-time employees. Previously, large employers had to provide affordable coverage to 95 percent of their full-time employees. The 95 percent threshold will not have to be satisfied until 2016.
The new guidance also offers clarifications on which employees must be counted for meeting the 50 full-time employee threshold. The following will not be considered in the full-time employee count.
- Volunteers will not be considered employees.
- Seasonal workers who are employed less than 6 months per year will not be considered full-time employees.
- Educational employees will not be considered part time just because their school is closed in the summer.
- Student work-study participants will not be counted as employees.
- Adjunct faculty may be calculated as performing 2-1/4 hours of service per week for each hour of teaching or classroom time.
Employers with less than 100 workers will have to certify to the government that they did not fire workers to get under the 100 employee threshold and that they do not plan to cancel the health plans they already offer.
The U.S. Department of Treasury fact sheet about the new rules is found here.
This second delay in implementation of the employer mandate provides businesses extra time to provide adequate coverage under health care reform and will certainly be welcome news for most companies. It provides employers added time to understand how to determine full-time status and to familiarize themselves with all reporting requirements.
