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Employer Responsibilities under the Affordable Care Act’s Employer Shared Responsibility

Published:  February 13, 2014

The Affordable Care Act (ACA) has seen many delays and false-starts but it appears the final regulations have finally been decided, at least for the Employer Shared Responsibility portion. This past Monday the U.S. Treasury Department issued a Fact Sheet and Final Regulations Implementing Employer Shared Responsibility under the ACA for 2015 that states employers’ obligations and attempts to ease the transition.

Employer’s obligations vary depending on the number of full-time employees they have. Companies with 100 or more employees will need to offer health coverage to at least 70 percent of their employees in 2015 in order to avoid fines. This amount will increase to 95 percent in 2016. Companies with 50-100 employees will not need to comply with this requirement until 2016 when they will need to offer health coverage to at least 70 percent. These companies will also have one year before that percentage increases to 95 percent in 2017. Once the 95 percent requirement goes into effect, those companies are required to continuing offering health coverage for at least 95 percent of their employees continuing into the future. Fortunately, employers with less than 50 employees are exempt from this requirement altogether.

The U.S. Treasury Department also offers further guidance about which employees are considered full-time employees. Teachers and other educational employees should be treated as full-time even if the school is closed or operating on a limited basis during the summer. However, most volunteers, seasonal employees, and student-work employees will not be considered full time employees for the purpose of this provision. Just as in the December 2012 proposed regulations; these final rules allow employers to measure the number of full-time employees based on the amount of full-time employees companies employed in the previous year.

Finally, a few other rules that were to be applied by 2014 have been extended. For example, if a health plan doesn’t start on January 1 then a company may wait until the start of its plan year to begin offering health coverage as outlined above. Also, employers need not offer coverage to full-time employee’s dependents in 2015 as long as they are taking steps to arrange for such coverage to begin in 2016.

If you have any questions about your obligations under the Affordable Care Act, please contact any of the attorneys at Royal LLP at (413) 586-2288.