This past Monday (February 10, 2014) the Treasury Department issued long awaited FINAL REGULATIONS pertaining to the Affordable Care Act’s (ACA) “employer mandate”, aka “employer shared responsibility”; or “pay or play”. There is a great deal of information and guidance contained in these regulations, thus, I will not attempt to address all of it in this post. Rather, I’ll provide some of the highlights, and embed some links to direct you to more comprehensive details. To review what, how, and whom the employer mandate affects, click – http://sstevenshealthcare.blogspot.com/2013/06/understanding-employer-shared.html
It is imperative that readers/stakeholders understand there are two (2) aspects to this release:
1. A delay of the employer mandate for otherwise affected employers with 50-99 full-time employees until – “the first plan year beginning on or after JANUARY 1, 2016”.
(IMPORTANT: Employers eligible/affected by this additional, one year delay will need to certify they are not reducing the number of full-time employees employed merely to take advantage of the delay); and
2. Guidance to assist businesses that must comply with the mandate in 2015 and beyond.
Employers with 100 or more full-time employees were provided with additional guidance pertaining to phasing in the employer mandate in 2015 and 2016. Such employers will not face penalties if they offer coverage to 70% of their full-time employees and dependents* under the age of 26 in 2015. Such employers will need to offer coverage to 95% of full-time employees and dependents* under the age of 26 beginning in 2016.
*Note: The full-time employee definition remains 30 hours or more per week; and the definition of dependent has been revised to exclude stepchildren and foster children, and continues to exclude spouses.
Additional aspects of the final regulations include:
Extension of Transition Relief for 2015
The final regulations extend transitional relief in several ways, including:
Full-Time and Part-Time Employee Definitions
The regulations clarify the methods employers can use to determine whether employees are full-time or part-time; and address these specific situations:
Safe Harbors for Affordability Determination
The regulations confirm that employers can use W-2 wages, hourly rates or the federal poverty level to determine whether the coverage they offer is considered “affordable” for penalty purposes. If the W-2 safe harbor is used, full W-2 wages must be used and cannot be reduced for salary reduction elections under 401(k) retirement plans or Section 125/cafeteria plans.
To access the Department of Treasury Fact Sheet on these final regulations, click – http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet%20021014.pdf
To access a copy of the actual regulations, click – http://www.cignaproducer.com/pdf/Employer_Mandate_Final_Reg_02-10-14.pdf