For the second time in one year, the U.S. Department of Treasury and the Internal Revenue Service have further delayed the employer “pay or play” mandate – but only for certain employers.  As announced in our prior client alert, the employer mandate provisions, which were originally  scheduled to take effect January 1, 2014, were delayed last summer until 2015. The employer mandate  provisions have been delayed again until 2016. However, this additional delay applies only to  employers with 50 to 99 employees who satisfy certain requirements.

This delay is welcome news for many medium-sized employers. Employers with fewer than 50 employees are not subject to the employer mandate. Employers with more than 99 employees or employers with 50  to 99 employees who fail to meet the requirements for this additional  transition relief generally  must comply with the employer mandate for periods after December 31, 2014.

To be eligible for this additional transition relief, an employer must employ on average at least  50 full-time employees (including full-time equivalent employees (FTEs)) but fewer than 100 full-  time employees (including FTEs) on business days during 2014. Special rules apply to new employers.  This transition relief will not apply to an employer that reduces the size of its workforce or the overall hours of service of its employees during the period from February 9, 2014 through December 31, 2014 or to an employer that eliminates or materially reduces the health coverage offered as of  February 9, 2014. To be eligible for this transition relief, an employer must certify on a  prescribed form that it meets these eligibility requirements.

This additional delay was announced as part of comprehensive final employer mandate regulations  that were issued yesterday and are expected to be published in the Federal Register on February 12,  2014. We are preparing a detailed client alert on the final employer mandate regulations that will be published separately.