Affordable Care Act Mandate Changes for Businesses with 50-99 employees!

Employer Coverage Mandate

The employer mandate provisions were set to take effect on Jan. 1, 2014, but have been delayed for one year, until 2015. Employers with 50-99 full-time employees may qualify for additional transition relief that extends the compliance deadline for the employer mandate to 2016.

Employers with 50 or more employees (including full-time and full-time equivalent employees) that do not offer health coverage to their full-time employees (and dependents) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange. The sections of the Affordable Care Act (ACA) that contain the penalty requirements are known as the “shared responsibility” provisions.

The shared responsibility provisions were set to take effect on Jan. 1, 2014. However, on July 2, 2013, the Treasury Department announced the delay of the employer mandate penalties and related reporting requirements for one year, until 2015. Therefore, these payments will not apply for 2014. On July 9, 2013, the IRS issued Notice 2013-45 to provide more formal guidance on the delay. No other provisions of the ACA were affected by the delay.

On Feb. 10, 2014, the Treasury Department released final regulations implementing the ACA’s shared responsibility provisions. The final regulations include transitional relief to help employers come into compliance with the new requirements. Large employers with 100 or more full-time employees will be subject to the employer mandate rules starting in 2015. However, the final regulations delay implementation for medium-sized employers that are covered by the employer mandate. Covered employers with fewer than 100 full-time employees will have an additional year, until 2016, to comply with the shared responsibility rules. To qualify for this delay, the employer must provide an appropriate certification as described in the final regulations.

The penalty amount for not offering health coverage is up to $2,000 annually for each full-time employee, excluding the first 30 employees. For 2015, instead of excluding the first 30 employees, an employer may exclude the first 80 employees under this calculation. Under the final regulations, an employer will not be liable for this penalty for 2015 if it offers coverage to at least 70 percent of its full-time employees. In 2016 and beyond, an employer will not be liable for this penalty if it offers coverage to all but five percent (or, if greater, five) of its full-time employees and dependents.

Employers subject to the shared responsibility rules will have to report information on the design and cost of their plans, applicable waiting periods and employees covered by the plan. These reporting requirements were also delayed for one year, until 2015. In preparation for the application of the employer mandate provisions beginning in 2015, the IRS is encouraging employers and other affected entities to voluntarily comply for 2014 with the information reporting provisions and to maintain or expand health coverage in 2014. The IRS has indicated that it will issue final regulations on the reporting requirements in the near future that aim to substantially simplify and streamline the employer reporting requirements.

For more information on these changes and how they may affect your business, please contact your McSweeney & Ricci Account Manager.

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