The federal government recently issued final regulations that apply to the "employer mandate" or "play or pay" provisions under the Affordable Care Act (ACA). These provisions require employers with 50 or more employees to offer full-time employees (and their dependents) the opportunity to enroll in an adequate and affordable employer-sponsored health plan or pay a penalty. Last year, the government postponed enforcement of the new mandate until 2015. Now, the government has provided a further delay for employers with 50 to 99 employees and modified for one-year the coverage requirement that applies to employers with 100 or more employees:
- Employers with 50 to 99 full-time employees will not be subject to ACA's employer coverage requirements until 2016.
- Employers with 100 or more full-time employees will be subject to the employer mandate beginning January 1, 2015. However, for 2015 these larger employers must offer coverage to at least 70% (rather than 95%) of their full-time employees in order to avoid a penalty. The 95% criterion will apply for 2016.
In effect, medium-sized employers will have an additional year to plan for the employer mandate.
The final regulations provide additional guidance on determining full-time employee status and counting service hours. They also clarify the affordability safe harbors and provide 2015 transition relief to some of the other rules that originally were to apply in 2014.
Reactions to the final regulations in the business community have generally been positive. However, many medium-sized employers continue to worry that the expense of providing coverage may be too much to bear, even with the new one-year delay. This has led some analysts to speculate that the employer mandate provisions could lead to decreased hiring, reduced hours or even layoffs once they go into effect as borderline employers strive to stay below the 50-employee cutoff.
Consulting with an experienced employee benefits attorney can help you understand how best to prepare for and implement the employer mandate.