Recently, the U.S. Department of the Treasury issued final regulations under Section 4980H of the Affordable Care Act regarding implementation of employer responsibility provisions. Of particular note for medium‑sized employers, the regulations provide for a delay in enforcing the employer mandate for employers with 50 to 99 full‑time employees. These employers will now have until the plan year beginning in 2016 to provide coverage to full‑time employees. However, the transition relief will not be granted to an employer who reduces its workforce below 100 in order to gain the relief (as opposed to bona fide business reasons).
Additionally, the final regulations provide relief to larger employers through the use of a phase‑in provision for 2015. Prior to the release of the regulations, larger employers with 100 or more full‑time employees were expected to be subject to penalty if coverage was provided to less than 95% of their full‑time employees. The final regulations provide that in 2015 plan years, the larger employers will need to offer coverage to just 70% of full‑time employees to avoid penalties. The percentage then jumps to 95% in 2016 plan years and beyond. However, this relief only applies to the “sledgehammer” penalty for failure to offer coverage under Section 4980H(a). The penalty under Section 4980H(b) still applies for plan years beginning in 2015 in each case where the employer fails to provide affordable, minimum value coverage to a full‑time employee who receives subsidized coverage through a health insurance exchange.
The Department of the Treasury is expected to release additional rules about how employers must report the insurance status of its workers in the near future. The final regulations address a number of other important issues that we will be posting about over the next few weeks.