Executive Summary: Under final regulations issued by the U.S. Treasury Department on February 10, 2014, employers with at least 50 but fewer than 100 employees will not be required to comply with the employer shared responsibility provision of the Affordable Care Act (ACA) until January 1, 2016.  Employers with at least 100 employees will be required to comply with this provision beginning January 1, 2015.

Employer Mandate:  The shared responsibility provision, also known as the employer mandate, requires employers with 50 or more full-time employees to offer health insurance coverage to their full-time employees or face a penalty.  Employers must offer "minimum essential health coverage" to substantially all of the employer's full-time employees.  In addition, this coverage must provide minimum value and be affordable.  The employer will be assessed a penalty if one or more full-time employees obtains coverage from a state- or federally-run health insurance exchange and is eligible for a subsidy or cost-sharing reduction.  Under the ACA, a "full-time" employee is an employee who works 30 hours or more per week or 130 hours or more per month.

Employer Mandate Delayed for Mid-size Employers:  The final regulations provide transition relief for employers with at least 50 but fewer than 100 employees by providing that they are not required to comply with the employer mandate until January 1, 2016.  The transition relief applies for 2015 and, for non-calendar plan years that begin in 2015, the portion of that 2015 plan year that falls in 2016.  Under the transition relief, no payment under the employer mandate provision will be required for any calendar month in 2015 or any month during the portion of the 2015 plan year that falls in 2016. 

To qualify for the transition relief, employers must certify that they have not laid off employees to fall below the 100-employee requirement.  The preamble to the final regulations states that reductions of workforce size or overall hours of service for "bona fide business reasons" will satisfy this requirement. 

Additionally, these employers must not eliminate or materially reduce the health coverage, if any, offered to employees as of February 9, 2014.  This requirement applies to the "coverage maintenance period," which, for employers with calendar year plans, is from February 9, 2014 through December 31, 2014.  For employers with non-calendar year plans, the coverage maintenance period is the period beginning on February 9, 2014, and ending on the last day of the plan year that begins in 2015. 

Additional Relief for 2015:  Employers who are required to comply with the shared responsibility provision for 2015 (those with 100 or more full-time employees) must offer coverage to at least 70 percent of their full-time employees for 2015 to avoid being required to pay a penalty.  The requirement increases to 95 percent in 2016 and beyond.

Employers' Bottom Line:  Employers should continue to take steps to comply with the requirements of the ACA that have not been delayed.