After several delays, the Affordable Care Act’s "employer mandate" has begun to take effect. Under the mandate, employers with more than 50 fulltime employees (Large Employers) must offer affordable, minimum essential coverage (Coverage) to all fulltime employees. Such Coverage must cost less than 9.5 percent of annual household income and must pay for at least 60 percent of covered services. Large Employers also must comply with new Internal Revenue Service reporting requirements for the 2015 tax year.

The mandate became effective for Large Employers with 100 or more fulltime employees on January 1, 2015, and will do so for other Large Employers beginning January 1, 2016. 

If a Large Employer with more than 100 fulltime employees does not offer Coverage to at least 70 percent of its fulltime employees in 2015, and any of its fulltime employees receives subsidized coverage through a health insurance exchange, then the Large Employer will owe a penalty of $2,000 per year for each fulltime employee after the first 80 fulltime employees. In 2016, the percentage of fulltime employees who must receive Coverage will increase to 95 percent, and the penalty will apply to each fulltime employee after the first 30 fulltime employees. 

A recent bill passed by the House of Representatives may complicate the mandate’s implementation. That bill, which President Obama has threatened to veto, would raise the requisite number of hours per week for an employee to be considered fulltime from 30 to 40. If the bill becomes law, it may incentivize employers to keep employees under the new 40-hour threshold.

Although the mandate applies only to Large Employers with more than 100 fulltime employees in 2015, all Large Employers presently must file IRS Forms 1094-C and 1095-C for the 2015 tax year.