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Employer Mandate


Under the Affordable Care Act, the employer “shared responsibility” excise tax was added under section 4980H of the Internal Revenue Code. This tax was slated to go into effect as of the first plan year in 2014, and applies to both grandfathered and non-grandfathered plans, however; the Treasury Department announced on July 3, 2013 that they were delaying implementation of the employer mandate penalties and reporting requirements until 2015.

 

When the Internal Revenue Service (IRS) and the Department of the Treasury issued the final rule implementing the employer shared responsibility requirements, further transition relief was provided to help employers adjust to and comply with these complex requirements. To determine when an employer must comply, see the chart below:

 

 

Employer Size

Defined As

Applicability

Large Employers

Any employer with 100 or more full-time or full-time equivalents employees in the previous calendar year.

Plan year beginning on or after January 1, 2015, as long as the employer offers affordable coverage that provides minimum value by the first day of the 2015 plan year.

Medium-Size Employers

Any employer with 50 to 99 full-time or full-time equivalents employees in the previous calendar year.

Plan years beginning on or after January 1, 2016, as long as the employer offers affordable coverage that provides minimum value by the first day of the 2016 plan year. 

Small Employers

Any employer with fewer than 50 full-time or full-time equivalents employees in the previous calendar

Exempt from this requirement.

 

Penalties

 

If an applicable large employer fails to provide both affordable and comprehensive coverage and a full-time employee (i.e., an employee who works an average of at least 30 hours per week, or if using a monthly measurement, a 130 hours of service per month) receives subsidized coverage through an exchange, the employer may be subject to penalties under Internal Revenue Code Section 4980H. The penalties differ depending on the circumstances—an employer who does not provide minimum essential coverage to its full-time employees and dependents, versus an employer who does not provide affordable coverage or coverage that meets minimum value.

 

There are rules around which employees have to be offered coverage and which employees do not, as well as guidance around how an employer identifies a full-time employee.

 

Reporting requirements

 

The Internal Revenue Code also added new reporting requirements under sections 6055 and 6056 related to health insurance coverage provided by insurers and employers to enforce the employer and individual mandate requirements. Mandatory reporting began for the 2015 plan/tax year with returns due in 2016.

 

This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.