Companies with 50-99 employees that do not offer health insurance to their workers will not be subject to fines for failing to provide coverage until 2016. This gives such mid-sized firms an additional year to prepare health coverage for workers, and that delay adds to the one-year delay in enforcement of the Affordable Care Act’s employer-mandate announced last July. The employer mandate was originally supposed to start in 2014.
The changes are found in final rules now on public display and scheduled to be published in the Feb. 12 Federal Register by the U.S. Treasury Department. They will become effective on that date.
Firms with 100 or more workers must still offer coverage, but they can satisfy the employer mandate by offering it to 70 percent of their workforce, as opposed to 95 percent, the percentage that was required before the change. Large employers that do not cover 70 percent or more of their workers will have to pay a fine in 2015. The percentage large employers will need to cover will revert to the statute’s original 95 percent in 2016.
The smaller percentage requirement may help employers adjust to health care reform’s new definition of a full-time worker as somebody working 30 hours a week, the Treasury Department stated. For example, employers might use the additional leeway to skip offering coverage to employees who work 30 to 34 hours until 2016, while offering coverage to employees with 35 or more hours.
Under the rule, large employers with non-calendar year plans are subject to the mandate based on the start of their 2015 plan year rather than on Jan. 1, 2015.
Employers still may not reduce their workforce to qualify for transition relief and they must maintain previously-offered coverage, the rule stated.
Small businesses with fewer than 50 employees still do not have to provide coverage or report on the coverage they offer their employees; such businesses will not have to offer coverage at any time under the reform law, Assistant Secretary for Tax Policy Mark J. Mazur said in a statement.
The rules were designed to make compliance with the health care reform law simpler and easier to navigate, Mazur said. A series of IRS questions and answers provides more information on the current state of the employer mandate.
According to a fact sheet from the Treasury Department, other stipulations include:
- volunteer hours at government and municipal organizations, such as firefighters and emergency responders would not cause those workers to be considered full-time;
- teachers and aides would not be considered part-time because they do not work during the summer; and
- seasonal employees (those working fewer than six months per year) generally will not be considered full-time employees.
Other final rules will soon be issued to streamline employer reporting requirements for employers that offer “highly affordable” coverage to all or virtually all of their full-time employees, Mazur stated.
Duties related to the employer mandate involve: (1) setting up minimum essential coverage; (2) counting full-time equivalents to see whether the company is big enough to be subject to the requirement; (3) identifying full-time workers (who work 30 hours a week or more) who must receive an offer of health coverage; (4) distributing standardized summaries of coverage; (5) getting workers enrolled in coverage within 90 days; and (6) reporting to the IRS on the kind of coverage being offered and who is enrolled in such plans.
Last July, the government suspended penalties against employers that fail to provide health coverage through 2014, because reporting requirements had not yet been spelled out. Reporting requirements about the existence or non-existence of health coverage that were delayed in July 2013 will take effect on Jan. 1, 2015 for all applicable large employers, including those with 50 to 99 workers.
For more information on health care reform’s employer mandate, see Section 410 of the New Health Care Reform Law: What Employers Need to Know.