With recent news of the employer mandate delay, we will share additional information regarding changes to the mandate's implementation and the associated reporting requirements as information becomes available.
Requirement to Offer Coverage
Beginning in 2015, employers with 50 or more full-time employees that do not offer minimum essential (health care) coverage must pay a fee if any full-time employee receives premium assistance through an Exchange [$2,000 multiplied by the total number of full-time employees minus 30, as the first 30 employees are exempt].
Employers who offer minimum essential coverage, but who have employees for whom the coverage does not meet minimum value or is not affordable, must pay the lesser of: $3,000 for each full-time employee who receives premium assistance through an Exchange or $2,000 per full-time employee (minus 30).
Frequently Asked Questions
- What are the employer coverage mandate penalties?
Certain small employers (employing less than 50 full-time employees) are exempt from the employer mandate provisions. Otherwise, the penalties may vary depending upon whether coverage is provided by the employer, and if the coverage is deemed "affordable." Under the law as written, coverage is defined as unaffordable if the employee's cost for self-only coverage exceeds 9.5 percent of the employee's household income. On Sept. 13, 2011, the Internal Revenue Service proposed a safe harbor under which an employer would not be subject to the penalty as long as the employer offered its full-time employees (and their dependents) minimum essential coverage and the employee portion of the self-only premium for the employer's lowest-cost coverage did not exceed 9.5 percent of the employee's W-2 wages, as opposed to the employee's household income. In such case, even if the employee did qualify for premium assistance through the Exchange, the employer would not be penalized.
An employer may also be required to pay a penalty even if the employer offered minimum essential coverage if an employee qualifies for premium assistance and purchases coverage through an Exchange on the basis that the employer's coverage is not affordable or does not provide minimum value. If an employee qualifies for assistance, and purchases coverage through an Exchange, the penalty will equal the lesser of $3,000 per full-time employee who receives premium assistance to purchase coverage with the first 30 employees being exempted in each case.
- Is a grandfathered health plan subject to the requirements of the employer mandate?
The employer mandate is applied to employers, not plans. Employers who offer grandfathered plans are not exempt from the mandate, however, grandfathered plans are considered minimum essential coverage under the employer mandate.