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Understanding the Final Regulations on the ACA Employer Mandate

March 10, 2014

The Patient Protection and Affordable Care Act (Obamacare) requires that large employers provide adequate and affordable health benefits to all “full-time” employees or pay non-deductible penalties (often referred to as the ’employer mandate’ or “shared responsibility” or ‘play-or-pay’ provision).

IRS issued proposed regulations on the mandate (section 4980H of the Internal Revenue Code) in late December 2012 but left many important issues unanswered. Adding to employer confusion, on July 2, 2013, the IRS delayed the effective date of the mandate from 2014 to 2015.

On February 10, 2014, the IRS issued comprehensive final regulations which provide an additional delay for certain ‘medium’ size employers, grant new transitional relief and clarify many of the previously unresolved issues. Employers need to understand the final rules and start preparing now for the 2015 mandate implementation, including:

  • What are the requirements to qualify as a “medium” employer and enjoy the additional one year delay?
  • What does the relaxation of the offer of coverage rule from 95% to 70% really mean for large employers?
  • How do I take maximum advantage of the special transition rules?
  • How do I count employees and hours and determine “full-time” employees and full-time equivalent employees?
  • How do I take maximum advantage of the look-back measurement period?
  • What coverage do I need to offer to avoid penalties?
  • How are penalties calculated and assessed?
  • What new reporting requirements will I need to prepare for?
  • What strategies are available to minimize or avoid the mandate penalties?

PLEASE NOTE: These presentations will provide substantive information applicable to “large” employers (those employing 50 or more employees on a typical business day) and smaller employers may not find them beneficial.

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