Final Regulations for Employer Mandate Provisions (Pay or Play).
On February 10, 2014, the Treasury Department released final regulations on the employer mandate provisions (also known as the “Pay or Play” provisions) of the Patient Protection and Affordable Care Act (“ACA”). Under the proposed rules, employers with 50 or more employees were required to provide their full-time employees – defined as employees working over 30 hours per week – with health insurance.
The final rules provide a gradual phase-in of the employer mandate provisions. Employers with more than 50, but less than 100 employees will not be subject to any penalties if they fail to provide health insurance to their full-time employees in 2014 and 2015. This employer mandate will kick in for this in 2016, and barring any future changes, this group will not be subject to penalties until then.
Employers with 100 or more employees also got a break. Although these employers generally have to comply with the employer mandate beginning 2015, the final rules provide that in 2015 these employers can avoid the penalties for failing to cover all their full-time employees if they offer coverage to at least 70 percent of full-time employees. That percentage increases to 95 percent in 2016.
Employers under 50 employees have never been subject to the employer mandate.
The regulatory relief comes with conditions. In order to get the benefit of the extension, employers with 50 to 99 employees must meet the following conditions:
- Employers cannot reduce the size of their workforce or the overall hours of service of their employees during 2014, except for bona fide business reasons.
- Employers cannot eliminate or materially reduce the health coverage they offer to employees between now and 2016. To meet this requirement, employers must timely certify to the Internal Revenue Service that they have met the following requirements:
(a) the plan includes an employer contribution toward the cost of employee-only coverage that is not less than 95 percent of the contribution in effect on February 9, 2014;
(b) the plan complies with the ACA’s rules on “minimum value;” and
(c) the plan is not amended to reduce the classes of employees and dependents eligible for coverage.
Bills Would Define Full-Time Employees as workers that Work minimum of 40 Hours Per Week.
Bills with bipartisan support have been introduced in the House and the Senate to amend the ACA’s definition of full-time workers as workers that work a minimum of 30 hours to workers that work a minimum of 40 hours.
Under ACA employer that average 50 or more employees must provide health coverage to their full-time employees and their dependents or face stiff penalties. These requirements have been suspended in 2014 and employers with employees between 50 and 99 do not have to comply with the employer mandate until 2016.
Rep. Dan Lipinski (D-IL) introduced H.R. 2988 and Sens. Susan Collins (R-ME) and Joe Donnelly (D-IN) introduced S. 1188. The House bill was voted out of the Ways and Means Committee on February 12, 2014, and now awaits a full vote on the House floor. Other similar bills have also been introduced. The bills are supported by a number of associations representing diverse industries, including franchises, theatre owners and grocers and organized labor groups.
As always, the NARFA team is keeping a close eye the rapidly changing legislation surrounding health care reform to keep you updated with the most important news-. Contact Us today.