When the Affordable Care Act passed into law it became clear that 2014 was slated to be the year when many changes were to take place including the Employer Shared Responsibility provision or Employer Mandate also known as “Pay or Play”. However, on July 9, 2013 the Treasury announced that all employers who are subject to the employer mandate are relieved of the employer shared responsibility penalties and reporting requirements until 2015. Further relief was announced on February 10, 2014 when the IRS and Treasury issued final regulations on the employer mandate and additional transitional relief.
The most recent transitional relief provides a gradual phase-in of the employer responsibility provisions. The employer mandate provision will generally apply to larger firms with 100 or more full-time equivalent employees starting in 2015. But for employers with between 50 and 99 full-time equivalent employees, who meet certain guidelines, the provision will start in 2016. Additionally, employers that are subject to the employer mandate provisions in 2015 must offer coverage to at least 70 percent of full-time employees as one of the conditions for avoiding the larger penalty, rather than 95 percent which will begin in 2016. According to the Treasury Department’s fact sheet, additional regulations will be issued shortly in an effort to “simplify and streamline” the employer reporting obligations under the employer mandate provisions of the ACA.
The final rule again points out the need to consider all employees under a common owner for determining the applicability of the employer mandate, even if the separate companies fall below the threshold. The rule also clarifies whether certain individuals classify as full-time employees, including volunteers, seasonal employees, and students who participate in work-study programs.
Business Benefits Insurance Solutions will work with employers to establish the most appropriate strategy in order to comply with the employer mandate at the appropriate time.