Transition Relief: Employer Mandate Delayed for Some
and Modified for Others
Who: Employers with 50 or more than full-time employees.
When: January 1, 2016 or the next policy anniversary following 1/1/2016.
What: The federal government:
(1) postponed the PPACA health insurance mandate for groups with 50-99 employees, and
(2) DID NOT postpone the mandated requirement for coverage for groups of 100 or more employees. The new standard does allow groups of 100 or more employees a lesser requirement on the percentage of full-time employees that need to be covered under their health plan, before being subject to a tax penalty:
a. 70 percent of full-time employees in 2015, and
b. 95 percent in 2016 and later years.
Executive Summary: Employers must offer full-time employees the opportunity to enroll in adequate and affordable coverage, or pay a penalty. The rules are referred to as the “employer mandate.” This mandate had previously been delayed from 1/1/ 2014 until 1/1/ 2015. The mandate has now been delayed further until 1/1/ 2016, but only for groups with 50 to 99 employees. There is no delay for groups of 100 or more employees.
There is, however, a relaxing on the percentage of full-time employees to whom groups of 100+ must offer cover. For these groups, penalties in 2015 will apply only to employers who fail to offer coverage to at least 70% of their full-time workforce. In 2016 and beyond, the non-penalty threshold will be 95% for all groups of 50 or more full-time employees.
In addition, several methods of calculating “Full-time” employees have been approved:
a. Adjunct faculty: count 2¼ hours for each hour of teaching and 1 hour for each hour outside of the classroom performing required duties.
b. Employees with "on-call" hours: count hours of service, including any on-call hours for which the employee has been paid or is entitled to payment.
c. Seasonal employees: Employees for which the customary annual employment is six months or less generally will not be considered full-time employees.
d. Rehired employees: a returning employee is a new employee if the break is more than 13 weeks.
The new regulations exclude from "hours of service" certain workforce activities, including:
a. Hours contributed by bona fide volunteers for a government or tax-exempt entity,
b. Service performed by students under federal or state-sponsored work-study programs, and
c. Any work performed subject to a vow of poverty as a member of a religious order when the work is in the performance of tasks usually required of an active member of the order.
Actions: Employer Plan sponsors should consult with their agent, broker, plan consultant, legal counsel, or Human Resources Department to determine if and when any changes apply to their group. You should also be sure to follow the specific rules for calculating full-time employees to assure which size group your company falls into and what changes or delays apply.
The information presented and contained within this article was submitted by Ronald E. Bachman, Chairman of the IHC Editorial Advisory Board and President & CEO of Healthcare Visions. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations in your state. Any opinions expressed within this document are solely the opinion of the individual author.