New ACA delay for mid-size employers
Posted On: 2-11-2014 | Posted By: WK Staff
The Treasury Department announced Monday that the “employer mandate” portion of the Affordable Care Act, under which employers who fail to provide health coverage to employees will be assessed a penalty, will be delayed until 2016 for employers with 50-99 full-time equivalent employees. Employers are eligible for the delay as long as they do not reduce their workforce or hours of service in order to qualify and maintain previously offered health coverage.
This is the second delay in the employer mandate for mid-size employers. The mandate, also called the “shared-responsibility” provision, was originally set to take effect in 2014. The IRS announced last July that this provision would be delayed until 2015. Mid-size employers now have an additional year to provide health coverage to their employees without facing a penalty for failure to do so.
Large employers, those with 100 or more full-time equivalent employees, are still required to provide and report health coverage in 2015. However, the regulations issued yesterday by Treasury also include some transition relief for large employers by phasing in the percentage of employees that must be offered health coverage over the next two years: 70% of employees in 2015 and 95% in 2016. Penalties will be assessed in 2015 if employers do not meet those thresholds.
The regulations also include transition guidance for non-calendar year plans. Employers may begin compliance on the start date of their plan year in 2015, rather than January 1.
So, what’s the bottom line?
- Employers with fewer than 50 full-time equivalent employees are not required to provide health coverage to employees.
- Employers with 50-99 employees must report workers and coverage in 2015 but will not face a penalty for failure to provide coverage until 2016.
- Employers with more than 100 employees must offer and report coverage in 2015. Penalties will be assessed if 70% of employees are not offered coverage in 2015 and if 95% of employees are not offered coverage in 2016 and beyond.
The ACA continues to be a source of confusion for employers, but WK is committed to helping you stay up-to-date regarding the latest changes. For more information, contact your WK advisor at (573) 442-6171 or (573) 635-6196.
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