Updates to Affordable Care Act Announced

On Feb. 10, the U.S. Treasury Department issued Final Regulations Implementing the Employer Shared Responsibility Under the Affordable Care Act (ACA) for 2015. This update to the ACA gives mid-sized employers an additional year before the employer mandate takes effect. Employers with 50 to 99 full-time equivalent employees (FTEs) now have until Jan. 1, 2016, to offer health insurance to FTE employees or pay a penalty.

The employer mandate still applies to employers with 100 or more FTE employees. These employers must offer insurance to FTEs effective Jan. 1, 2015, or pay a penalty. The percentage of FTEs to be covered, however, was reduced from 95 percent to 70 percent for 2015. This amount will revert to 95 percent in 2016.

The final regulations also clarify the treatment of certain employees for the FTE calculation. Exemption from the FTE determination applies to bona fide volunteers for a government or tax-exempt agency, seasonal employees who generally work six months or less on an annual basis, and students in work-study programs. Further, educators will not be treated as part-time simply due to a reduced work schedule during summer hours.

Additionally, the regulations continue to allow the look-back option for measuring variable and seasonal employees which may utilize a six-month equivalent instead of a year and also provide for a monthly method of determining whether full-time status applies. The regulation also provides safe harbors to determine if the coverage is affordable and allows employers to use actual wages paid or the federal poverty level to determine if coverage is affordable for the affordability requirement under the employer mandate.

Other specific provisions for 2015 allow employers with fiscal plans to begin compliance with the employer mandate at the start of their plan years in 2015 rather than on Jan. 1, 2015, and the requirement that employers offer coverage to the dependents of FTE employees will not apply in 2015 to employers that are planning for such coverage to begin in 2016.