Employer Mandate 2015: 100+ Employees? Offer Health Care Coverage or Pay a Penalty

Employer Mandate 2015: 100+ Employees? Offer Health Care Coverage or Pay a Penalty

Employer Mandate: What You Need to Know for 2015 and Beyond

2015 marks the start of notable changes to the health system. The Employer Mandate, which was set to be implemented in 2014, but was delayed until 2015 (and some parts until 2016), is now here. Final regulations were issued almost one year ago, in February of 2014. These regulations cover several topics, including those listed below (from the Cigna Fact Sheet, linked below):

  • Phasing in of the Employer Mandate by Employer Size
    • Employers with 50-99 employees: How this Affects You
    • Employers with 100+ employees: How this Affects You
  • Extension of Transition Relief for 2015
    • Employers with non-calendar year plans
    • Dependent coverage details
    • Six-month look back
  • Determining Full-Time and Part-Time Employees
    • Volunteer workers
    • Teachers and education employees
    • Seasonal employees
    • Student workers
  • Safe Harbors for Determining if Coverage is Affordable
    • Using W-2 wages, hourly rates, or the federal poverty level to determine whether the coverage offered is affordable.
  • New Businesses and New Employees
    • Determining size of employer based on average number of employees expected to employ in current year.
    • New employees/90-days, no penalty if…
  • Need Help? Next Steps and What this Means for You
    • We invite you to download the fact sheets from Cigna and the US Department of the Treasury for further details
    • Employee Benefits Questions? Contact a FosterThomas Employee Benefits Specialist

CIGNA EMPLOYER MANDATE FACT SHEET

TREASURY DEPT EMPLOYER MANDATE FACT SHEET

Phasing in of the Employer Mandate by Employer Size

  • Employers with 50 to 99 full-time employees (FTE) will not face penalties for not offering coverage to full-time employees and their dependents up to age 26 until the first plan year beginning on or after January 1, 2016. These employers will need to certify that they are not reducing the size of their workforce to stay below 100 employees.
    • Small businesses, defined as those employing 50-99 FTE, must begin insuring FTE by 2016.
    • Businesses employing less than 49 FTE do not fall under this provision.
    • Employers with less than 25 FTE will qualify for tax credits (More information HERE)
  • Employers with 100 or more full-time employees (FTE) and their dependents up to age 26 will not face penalties if they offer coverage to 70% of their full-time employees in 2015. They will need to offer coverage to 95% of full-time employees beginning in 2016. (Cigna Fact Sheet, emphasis added)

Understanding the Employer Shared Responsibility Provisions

  • If an employer does not provide Affordable Coverage, they must pay the Employer Shared Responsibility Provisions (see below).
  • The Employer Mandate is part of the Employer Shared Responsibility Provisions. To understand how to determine whether your business is a small business or a large employer; please see the two fact sheets available above. This information discusses seasonal employees, number of days part-time and full-time employees are employed, and more. If you are still unsure, please contact a FosterThomas Employee Benefits Specialist to discuss your health care coverage needs. Contact FosterThomas.

To be subject to the Employer Shared Responsibility provisions for a calendar year, an employer must have employed during the previous calendar year at least 50 full-time employees or a combination of full-time and part-time employees that equals at least 50. For example, an employer that employs 40 full-time employees (that is, employees employed 30 or more hours per week on average) and 20 employees employed 15 hours per week on average has the equivalent of 50 full-time employees, and would be an applicable large employer. 

Seasonal workers are taken into account in determining the number of full-time employees. However, if an employer’s workforce exceeds 50 full-time employees (including full-time equivalents) for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not considered an applicable large employer. Seasonal workers are workers who perform labor or services on a seasonal basis as defined by the Secretary of Labor, and retail workers employed exclusively during holiday seasons.  For this purpose, employers may apply a reasonable, good faith interpretation of the term “seasonal worker.”

Employers will determine each year, based on their current number of employees, whether they will be considered an applicable large employer for the next year. For example, if an employer has at least 50 full-time employees (including full-time equivalents) for 2014, it will be considered an applicable large employer for 2015. Note that because employers will be performing this calculation for the first time to determine their status for 2015, there is a transition rule intended to make this first calculation easier. IRS.Gov

IRS Q&A ON EMPLOYER SHARED RESPONSIBILITY PROVISION

Final Regulations Press Release: Be Prepared

Please click the button below to read the original press release from the US Department of the Treasury (3/5/14) regarding the employer reporting requirements. We invite you to read this in its entirety. We understand that this is a bombardment of information, and can be confusing. Should you have further questions on how this affects you, as an employer, please contact FosterThomas HR Consulting for assistance.

FINAL REGS PRESS RELEASE

Employer Forms and IRS Reporting

Employers will file:
  • Form 1094-C (a transmittal/cover sheet) to the IRS only, and
  • Form 1095-C to both the IRS and named individuals.

IRS DRAFT FORMS

Employer Mandate Reporting

Employers with 50 or more full-time employees (including full-time equivalents) need to report on all of the employees offered coverage during the prior calendar year. This information must be provided to the IRS and all employees identified as being offered employer-sponsored health coverage.

Draft Forms FINAL FORMS NOW AVAILABLE AT THE LINKS BELOW

Insurers and employers have two (2) forms they must provide the IRS.

  • Each must provide a form that serves as a cover letter as well as forms providing data on the individual or employer mandate. The forms are to be completed and filed as follows:
    • Employers will file Form 1094-C (a transmittal/cover sheet) to the IRS only,
    • And Form 1095-C to both the IRS and named individuals. If its plan is insured, the employer will only complete Parts I and II of Form 1095-C.
    • Insurers will send Form 1094-B (a transmittal/cover sheet) to the IRS only,
    • And Form 1095-B to both the IRS and named individuals for insured coverage only.
  • The IRS is open to comments on these forms, which should be submitted to the Comment on Tax Forms and Publications page on IRS.gov.

FORM 1094C FORM 1095C FORM 1094B FORM 1095B Comment on Tax Forms and Publications

When instructions and revised or final forms are made available, we will keep you informed.

Self-Funding Alternatives and Cost Containment Strategies

SELF-FUNDING HEALTH COVERAGE

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About the Author

FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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