Health Care Reform Employer Mandate Delayed; Final Regulations Issued

The U.S. Treasury Department recently announced that enforcement of the provisions of the Affordable Care Act requiring employers with at least 50 full-time employees to offer healthcare to all full-time employees or face penalties will be delayed one year. This employer “shared responsibility” mandate was originally set to take effect on January 1, 2014. Citing the complexity of the requirements and the need for more time to implement them effectively, the Treasury Department stated that it was delaying implementation of employer obligations until January 1, 2015.

Transition Relief

For employers who meet the following conditions and have fewer than 100 full-time employees in 2014, the shared responsibility rules are delayed until the first day of the 2016 plan year.

• The employer must employ on average at least 50 full-time employees but fewer than 100 full-time employees on business days during 2014.

• During the period from February 9, 2014 through December 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief (other than for bona fide business reasons).

• During the period from February 9, 2014 and ending on the last day of the 2015 plan year, the employer does not eliminate or materially reduce the health coverage it offered, if any, as of February 9, 2014.

Finally, for employers who do not qualify for the above transitional relief, an employer is deemed to have made an offer of coverage to its full-time employees if it offers coverage to at least 70% of its employees for 2015. Proposed regulations previously set the threshold at 95%.

New Definitions Under the Final Regulations

Final regulations issued by the Treasury Department have clarified several provisions that are integral to the Affordable Care Act.

• Definition of “seasonal employee”: Now defined as an employee who is hired into a position for which the customary annual employment is six months or less.

• Definition of “part-time employee”: Now defined as a new employee who the applicable large employer reasonably expects to be employed on average less than 30 hours of service per week during the initial measurement period, based on the facts and circumstances of the employee’s start date.

• Definition of “dependent”: Includes biological children and adopted children who have not reached the age of 26, but now excludes stepchildren and foster children from the definition.

• Break-in-Service Rules: Initially, employers could treat returning employees who did not work for an employer for 26 consecutive weeks as a new employee. The final regulations reduce this period (for employers other than educational organizations) to 13 consecutive weeks.

If you have any questions or would like to discuss planning for compliance with the Affordable Care Act, please feel free to contact the author of this LawFacts at tadams@seatonlaw.com or at (952) 921-4618, or any Peters, Revnew, Kappenman & Anderson, P.A. attorney at (952) 896-1700.

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