The year 2015 is here and so is the Affordable Care Act's (ACA) employer "play or pay" mandate, which has been delayed, in total or in part, twice. On July 2, 2013, the Administration delayed the employer mandate for employers with more than 50 employees until 2015. Then on Feb. 10, 2014, the Administration extended time to provide health insurance to full-time employees to certain employers. Under the February extension, employers with 50 to 99 employees will have until 2016 before the federal penalty kicks in for not providing health insurance to full-time workers. Further, the February extension granted some relief to large companies, in that it stated that companies with 100 or more employees need only offer coverage to 70% of full-time workers in 2015, and then to 95% of full-time workers in 2016 and beyond before the federal penalties kick in.
Now, the first quarter of 2015 is upon us and the employer
mandate was immediately effective as of Jan. 1 for calendar year
plans for large employers. Those with fiscal plan years may have
until the first day of their 2015 plan year to satisfy the mandate,
if certain requirements are first satisfied. For purposes of this
article, large employers with calendar year plans will be the focus
for ease of discussion and applicability.
Penalties
Effective Jan. 1, 2015, two penalties can occur under the employer mandate. These penalties have also been cited as the employer-shared responsibility payments, and, as mentioned above, are also sometimes known as the play or pay mandate, or penalties. Although these payments or penalties have been referenced by many names, they boil down to real dollars that can impact the bottom line:
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1. Failure to Offer Health Coverage At All
- $2,000 annual penalty applies to a large employer that does not offer health coverage to at least 70% of its full-time employees (and their children) for 2015 and only if any full-time employee receives a federal subsidy to purchase insurance on a governmental health exchange.
- $2,000 annual penalty applies to a large employer that does not offer health coverage to at least 95% of its full-time employees (and their children) for 2016 and beyond and only if any full-time employee receives a federal subsidy to purchase insurance on a governmental health exchange.
- For 2015 only, this penalty exempts the employer's first 80 full-time employees. For 2016 and beyond, the penalty exempts the employer's first 30 full-time employees.
- Thus, for 2015, the penalty is assessed monthly on all of the employer's full-time employees, minus the 80 full time employees, if 70% of its full-time employees (and their children) are not covered, and only if any full-time employee receives a federal subsidy to purchase insurance on a governmental health exchange.
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2. Failure to Offer Health Coverage of 'Minimum Value' And 'Affordable'
- $3,000 annual penalty that applies to each full-time employee who is not offered health coverage that is of "minimum value" and only if any full-time employee receives a federal subsidy to purchase insurance on a governmental health exchange.
- $3,000 annual penalty that applies to each full-time employee.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
