Under the Affordable Care Act's employer mandate, larger employers may face penalties if they do not offer affordable, minimum health insurance coverage to employees. Originally set to begin in 2014, the employer mandate has been delayed until 2015 or 2016, depending on the employer's size.
This article reviews what businesses, health insurance professionals, and CPAs need to know about the employer mandate for 2015.
Small Employers (< 50 FTEs) - No Employer Mandate
Small employers with fewer than 50 FTE employees are exempt from the employer mandate and penalties.
In other words, small employers with fewer than 50 employees have no requirement to offer traditional health insurance coverage and are not subject to the employer shared responsibility penalties.
Mid-Size Employers (50 - 99 FTEs) - Transition Relief Available
2015 is a "phase-in" year for the employer mandate, as there is transition relief available for some employers with 50-99 full-time equivalent (FTE) employees.
Larger Employers (100+ FTEs) - Employer Mandate Starting in 2015, with Leeway
Larger businesses (100+ FTEs), most of whom already offer health benefits, are subject to the employer mandate and penalties starting in 2015. However, there is leeway for 2015.
In 2015, larger businesses will satisfy the employer mandate if they offer coverage to 70% of full time employees in 2015 and 95% in 2016.
To summarize, for 2015:
The employer mandate only applies to employers with 100+ FTE employees.
The employer is subject to the fee if they do not offer minimum essential, affordable coverage to at least 70% of full-time employees.
The Employer Shared Responsibility Fee is equal to the number of full-time employees the employer employed for the month (minus 80) multiplied by 1/12 of $2,000, provided that at least one full-time employee receives a premium tax credit/subsidy for that month.
Additional Resources on the Employer Mandate
For background on the employer mandate, see:
- ACA Employer Mandate Delayed (Again) for Mid-Size Employers
- ACA Employer Mandate and Penalty Delayed until 2015
- Why the ACA Employer Mandate Delay is Great for Your Business
- Employer Mandate - What Happens If a Company Does NOT Offer Health Insurance