On February 10, 2014, the U.S. Department of Treasury and the Internal Revenue Service issued new final employer mandate regulations which further extended when employers will have to fully comply with Health Care Reform.  Most notably, as a result of the final regulations, employers with 50 to 99 full-time or full-time equivalent employees will not be subject to the employer mandate penalty until 2016.

Background

Health Care Reform’s employer mandate originally required employers with 50 or more full-time or full-time equivalent employees to, beginning, January 1, 2014, either provide at least 95 percent of employees with health care coverage meeting certain minimum requirements or pay a penalty.  However, as we previously reported, on July 2, 2013, the Obama administration announced that it would be delaying compliance with the employer mandate until January 1, 2015.

Compliance Timeline for Employers of Varying Size

The delay for mid-sized employers makes it important for an employer to evaluate how many employees it has in order to determine when it will be subject to the employer mandate penalty.  Below we have summarized when employers of varying size will have to fully comply with the employer mandate:

Employers with less than 50 full-time employees.

The final regulations continue to provide that only employers with 50 or more full-time employees, including full-time equivalent employees, are subject to the employer mandate.  As a result, employers with less than 50 employees remain exempt from the employer mandate.

Employers with 50 to 99 employees.

The final regulations provide a one-year transition relief for employers with 50 to 99 full-time equivalent employees for purposes of the employer mandate penalty.  Consequently, employers with 50 to 99 employees will not be subject to any penalties until 2016 if they fail to offer all full-time employees health care coverage meeting certain minimum requirement.

Employers with 100 or more employees.

Employers with 100 or more employees will still be potentially subject to the employer mandate penalty beginning January 1, 2015.  However, the final regulations provide that they will not be subject to a penalty if at least 70 percent of their full-time employees are offered coverage meeting Health Care Reform’s requirements.  Beginning in 2016, employers with 100 or more employees will be subject to the penalty if they do not offer coverage to at least 95 percent of employees.

Finally, if should be noted that although the final regulations delay the full impact of the employer mandate until 2016, all employers with at least 50 or more employees are still subject to certain information reporting requirements beginning in 2015.

For assistance in determining how the final regulations may impact your company and/or your company’s health plan, please contact an Employee Benefits attorney at Davenport Evan.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.