The Internal Revenue Service (IRS) says it will let employers with 50 to 99 full-time employees wait until Jan. 1, 2016, to comply with the Patient Protection and Affordable Care Act (PPACA) group coverage mandate.
But employers with 100 or more full-time employers will have to comply with the Internal Revenue Code Section 4980H “play or pay” provision Jan. 1, 2015.
Employers affected by the requirements in 2015 would have to offer coverage to just 70 percent of full-time workers in the first year and 95 percent in the second year, according to new final regulations that are set to appear in the Federal Register Wednesday.
Midsize employers that want to wait until 2016 to comply cannot simply downsize to fit into the 50-99 FTE category, but employers close to the 100-employee cut-off may be able to qualify for the mandate delay if they can show they reduced workforce size or hours for “bona fide business reasons.”
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Under PPACA, workers are “full-time employees” and eligible for the mandated coverage if they work more than 30 hours per week.
Phasing in the penalty should help workers who work 35 hours per week but have been considered part-time workers, IRS officials say.
The regulations — Shared Responsibility for Employers Regarding Health Coverage (RIN 1545-BL33) — implement a tax law added by PPACA Section 1513.
PPACA requires that employers with at least 50 full-time employees, or full-time equivalents (FTEs), offer health coverage or else pay a penalty for every employee who qualifies for subsidized coverage from the new PPACA health insurance exchange system.
Originally, the mandate was supposed to take effect for all secular employers with 50 or more FTEs this year.
’The penalty the employer pays would be based on the number of full-time workers that the employer employs. For purposes of calculating the penalty, the employer would not have to include part-time and seasonal workers in the calculations.
Under PPACA, only workers who are not offered group health coverage are eligible to apply for exchange coverage subsidies.