The U.S. Treasury Department and Internal Revenue Service issued the final regulations on the employer mandate under the Affordable Care Act this week. While the pay-or-play rules got a little delay, and some revisions will be debated for weeks to come, here are the nuts and bolts of the full regulation:
- Employers that have between 50 and 99 full-time equivalents will have until 2016 to provide health insurance, not 2015. So if you have 100 or more full-time equivalents in 2014, Jan. 1, 2015 is still your target. But if you have 99 or fewer, you get a one-year extension.
- Transitional relief is now available for non-calendar plans. There was some confusion over whether the 2014 transition relief would apply for 2015 and now it appears that it does. 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.
- Large employers (those with more than 99 full-time employees) have to comply in 2015, but for the first year, they will only have to offer coverage to 70% or more of their full-time employees. The 95% requirement will not go into effect until 2016.
- For large employers that contribute to a multi-employer plan, an employer will not be subject to shared responsibility penalties with respect to employees for whom the employer is required by the collective bargaining agreement or appropriate related participation agreement to make contributions to the multi-employer plan.
- Some categories of employees are better defined:
- For volunteers for a government or tax-exempt entity (like emergency response personnel), hours they volunteer will not count in consideration of their full-time employment status.
- For teachers and other educational employees, they will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer. Also, for adjunct faculty, employers of adjunct faculty may credit them with 2 ¼ hours of service per week for each hour of teaching or classroom time.
- For those in traditionally seasonal positions where annual employment is customarily six months or less, they will not be considered full-time employees.
- For students in work-study programs, these hours will not be counted in determining whether they are full-time employees.
The new regulations are 227 pages long and have a lot of examples and explanations that will potentially be clarified over the coming weeks. But rest assured that we are keeping track of these changes. Stay tuned for more updates and guidance. Of course, if you have any questions about the impact of these changes on your compliance package, make sure to ask your attorney or Fox Rothschild for assistance.
Keith R. McMurdy is a partner with Fox Rothshild focusing on labor and employment issues; he can be reached at email@example.com or (212) 878-7919.
The information in this Legal Alert is for educational purposes only and should not be taken as specific legal advice.
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