Has the large employer mandate been delayed again? If so, is the delay for all employers or just certain ones? We have 75 employees and offer a benefit plan to our employees. How will this affect us?
— Mad About the Mandate
The Large Employer Mandate has been Delayed for Some Large Employers
Yes, the Obama administration has once again delayed the employer mandate for some employers and relaxed some of its requirements for even larger employers (referred to as “transitional relief”). As you may remember, the mandate requires employers with 50 or more full-time employees (including full-time equivalent employees or “FTEs”) to offer health benefits to full-time employees or face potential tax penalties (smaller employers are not subject to the mandate). The mandate was set to begin January 1, 2014. The Obama Administration delayed the mandate in the summer of 2013 until 2015.
Employers with 50-99 Employees Get Until 2016—Employers with 100+ Employees Comply in 2015
Employers with 50-99 employees will not be required to comply with the large employer mandate in 2015 as long as they follow some rules explained below. Employers with 100 or more employees will be required to comply with the mandate in 2015 upon their plan renewal. These larger employers will only be required to offer coverage to 70 percent of their full-time employees in 2015. The law originally required large employers to offer coverage to 95 percent of their full-time employees. In 2016, however, the original 95 percent requirement comes back into play for all large employers (50 employees and above).
Employers with 50-99 Employees Must Follow Some Important Rules to Take Advantage of Delay
Employers must first qualify or be eligible to take advantage of the delay and second they must certify to the federal government that they are following the delay rules.
1. To be eligible an employer must:
• Employ at least 50 full-time employees (including FTEs), but fewer than 100 employees (including FTEs) during 2014.
• Not reduce its workforce between February 9, 2014 and December 31, 2014 or the overall hours of service in order to evade the mandate. An employer may, of course, reduce its workforce or hours of service for bona fide business reasons. For example, an employer terminating an employee for poor performance, selling a division of a company, or terminating employees based on changes in the economic marketplace unrelated to the mandate will be viewed as bona fide business reasons and will not affect the employer’s eligibility for the mandate delay.
• Maintain its previously offered health coverage. If an employer offered coverage on February 9, 2014, it must continue to do so without any substantial changes (i.e. elimination or material reduction) until the end of 2015 (or longer if it is a non-calendar year plan, e.g., if a plan year ends June 30, the employer would be required to offer it until June 30, 2016). To meet this requirement:
An employer must not change its employer contribution towards its employees’ coverage by more than 5 percent. That is, an employer must pay at least 95 percent of the dollar amount of the contribution that it was offering on February 9, 2014; or
The employer may pay the same percentage (or more) of the cost of coverage that it was paying on February 9, 2014
The employer must make sure that its plan meets minimum value if there is a change in benefits under the employee only coverage offered; and
The employer may not alter the terms of its group health plans to reduce or narrow the class or classes of employees (or the employees’ dependents) to whom coverage under the plans was offered on February 9, 2014.
For example, if on February 9, 2014, an employer was contributing $300 per month for employee-only coverage that costs $400 per month, and the employer continues to offer $300 per month after the cost of employee-only coverage increases to $425 per month the plan year beginning on July 1, 2014, the increase in cost to the employee will not be treated as a substantial change in the health benefits offered.
Assuming an employer is eligible as explained above, the second step that an employer must take is to certify to the Internal Revenue Service (IRS) that it is eligible.
2. To certify that an employer has met the above requirements it must:
• File a report with the IRS on a prescribed form stating that the employer meets the eligibility requirements explained above.
New regulations are being written to explain the manner in which this report will be filed and the form on which it will be filed
In your specific case, it appears you would qualify for the transitional relief (the delay) as long as you:
• Don’t reduce your workforce to escape the mandate
• Keep your health benefit plan pretty much the same
• Maintain your eligibility standards and not reduce the classes of employees who can participate; and
• Certify to the IRS that you’ve met the requirements (just as soon as the forms and regulations are provided)
Western Growers will be providing more updates on this newest employer mandate delay and some additional regulatory updates very soon. For more information about this article or if you have other questions about health care reform contact our Health Care Reform team today at HealthCareReform@wga.com or 800-333-4WGA. Write to Dear Jon at firstname.lastname@example.org.
For more information and resources on Health Care Reform, visit www.wgat.com/health-care-reform.
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