Treasury Department Issues Final Regulations on Affordable Care Act’s Employer Mandate, Offering Delay For Those With 50 to 99 employees until 2016

The United States Treasury Department issued much anticipated final regulations on the Affordable Care Act’s (“ACA”) employer shared responsibility provision on Monday, February 10, 2014. The final regulations’ major impact will be to delay the employer mandate for employers between 50 to 99 employees to 2016. Employers with 100 or more employees will be required to offer health insurance to full-time employees starting in 2015. However, the final regulations allow a phase-in of the requirement, which means that such employers will need to offer coverage to 70 percent of their full-time employees in 2015, and to 95 percent in years 2016 and beyond. Employers with less than 50 employees are not required to offer health insurance to employees under the ACA.

The final regulations, 227-pages in length, provide clarifications as to whether several categories of employees are considered full-time, including volunteers, educational employees, seasonal employees, student work-study programs, and adjunct faculty.

Like the December 2012 proposed regulations, these final regulations allow employers to use an optional look-back measurement period to determine whether employees with varying hours and seasonal employees are full-time. The final regulations clarify these rules and provide more detail on the alternative monthly method of determining full-time status.

The affordability safe harbors introduced earlier are also included in the final regulations. The safe harbors will allow employer to use the wages they pay, their employees’ hourly rates, or the federal poverty level, to determine whether employer coverage is affordable under the ACA.

Transitional relief that was introduced in the December 2012 proposed regulations also appear to have been updated to extend to 2015, including a transition rule for determining whether the employer is at the 100 employee threshold, transition relief for non-calendar year plans, a transition rule for the implementation of dependent coverage, and transitional rules for measurement periods for 2015.

The Treasury also announced that it will soon release final regulations on employer information reporting under the ACA that seek to simplify and streamline earlier proposed regulations on the requirement.

We will be reviewing the final regulations in greater detail and provide more in-depth analysis in the near future. Please stay tuned.

Categories: Employee Benefits

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