Employer Mandate: Does It Affect You?

The employer mandate, also called the “employer shared responsibility” or the “pay or play” mandate, is a health care reform penalty imposed on businesses for not offering health insurance to employees or not offering affordable or government-deemed comprehensive health coverage to employees.

In 2015, employers with 100 or more full-time equivalents will be subject to this penalty.  The penalties can be substantial ($2,000 x total number of employees less the first 30 employees) and most employers are grappling with best strategies to minimize liabilities and to understand when they are subject to these liabilities.  There has been much speculation as to when the penalty goes into effect since not all plans renew on the calendar year (01/01) and the penalty was delayed at the end of last year.

On February 12, 2014, the Internal Revenue Service (IRS) issued final regulations on the employer mandate rules. These rules state that all employers with 100 or more full-time equivalents are subject to the penalty on January 1, 2015.  Transition relief is available to employers with non-calendar year health plan renewal dates so long as they meet certain parameters.

We have created a decision tree as a means to help you determine if transition relief is available to you. Assuming that you have determined that you have 100 or more full-time equivalents, answer the following questions.

1.  Did the group have a health plan on December 27, 2012?

     NO: Employer Mandate effective January 1, 2015

     YES: Proceed to the next question

2.  Did the group modify the renewal date to a later calendar date after December 27, 2012?

     YES: Employer Mandate effective January 1, 2015

     NO: Proceed to the next question

3.  Prior to February 9, 2014, did the group cover at least 1/4 of its employees OR offer coverage to 1/3 or more of its employees?

      NO: Employer Mandate effective January 1, 2015

      YES: Penalty applicable on 2015 health plan renewal date

If you have determined that you are subject to the employer mandate and have concerns about how to mitigate the potential liabilities, there are solutions entering the marketplace that will meet the government mandated requirements without breaking the bank. Please call your Caravus employee benefit consultant for further details.

For more information, visit the IRS’ questions and answers section (Q&A 30-39) by clicking here.