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Affordable Care Act Compliance Deadlines Extended and Transition Relief Provided

Compliance deadlines for the employer mandate of the Affordable Care Act were again extended by final regulations issued Monday, February 10, 2014. The regulations also created transition relief for certain large employers.

The employer mandate requires large employers (i.e. those employers with 50 or more full-time or full-time equivalent employees) to offer affordable health insurance coverage, that provides minimum value, to full-time employees (i.e. employees who work 30 hour or more per week, on average). Large employers who do not offer this coverage could face a penalty payment of $2,000 per full-time employee above the first 30 full-time employees.

The employer mandate was originally set to take effect in 2014 but the deadline was extended last year to 2015. Now, under the final regulations, full compliance is not required until January 1, 2016. Under the final regulations:

•    Employers with more than 100 full time employees must offer health insurance coverage to 70% of full-time employees beginning in 2015. Beginning in 2016, employers must offer health insurance coverage to 95% of full-time employees.

•    Employers with between 50-99 full-time employees must offer health insurance coverage to 95% of full-time employees beginning in 2016. In 2015, these employers only need to file a report of the health insurance coverage offered to full-time employees.

•    Employers with less than 50 full-time employees need not offer health insurance coverage to full-time employees under the employee mandate.

The transition relief may benefit large employers that offer health insurance coverage to most, but not all, full-time employees. The regulations may provide relief, for example, to an employer who offers health insurance coverage to full-time employees who work 35 hours per week or more, but not yet to full-time employees who work between 30-34 hours per week. However, since the majority of large employers with more than 100 full-time employees already offer health insurance coverage for full-time employees, the actual impact of this transition relief may be small.

The largest impact of the regulations is likely to be on those employers that have between 50-99 full-time employees and do not yet offer health insurance coverage to full-time employees. Those employers will now have an additional year before deciding to offer health insurance coverage or pay the penalty payment.

Interestingly, it is estimated that only 4% of employers will be affected by the employer mandate at all, because 96% of employers are small businesses (i.e. have less than 50 full-time employees) not subject to the employer mandate.

For more information regarding this article or the Affordable Care Act, please contact Jenna Bickford at 814-870-7762, or any MacDonald, Illig, Jones & Britton LLP attorney with whom you have worked.