The U.S. Treasury Department and Internal Revenue Service has issued the final regulations on the employer mandate under the Affordable Care Act. The new 6055 & 6056 regulations are 227 pages long and Employee Benefit Advisors believes will prove to be the most cumbersome and costly part of Obamacare. We say costly because we believe this will prove to be far more complicated, and thus burdensome than employers realize. Employers with part-time, seasonal and variable hour employees (as an example a bus driver who also works maintenance; so he would have hours under two different pay codes or a temporary that works temp to perm etc.) will particularly have difficulties and will need a managed solution.
Software is available to help manage your employees and meet the new Healthcare Reform guidelines. This system is fully automated to your specifications and will complete all the necessary reporting documents. Contact Employee Benefit Advisors for a demo.
The laws reporting requirements fall under sections 6055 and 6056 of the internal revenue code. Under section 6056, large employers subject to the employer mandate must file a return with the IRS and provide a statement to each full-time employee with information regarding their offer of employer-sponsored healthcare coverage. Under section 6055, employers who offer self-funded plans and insurers generally must file a return with the IRS and provide a statement to each individual who is covered by plans that constitute minimum essential coverage.
Here are the nuts and bolts of the full regulation:
- Employers that have between 50 and 99 full-time equivalents will have until 2016 to provide health insurance, not 2015. So if you have 100 or more full-time equivalents in 2014, Jan. 1, 2015 is still your target. But if you have 99 or fewer, you get a one-year extension.
- Transitional relief is now available for non-calendar plans. There was some confusion over whether the 2014 transition relief would apply for 2015 and now it appears that it does. Employers with non-calendar year plans are subject to the mandate based on the start of their 2015 plan year rather than on Jan. 1, 2015.
- Large employers (those with more than 99 full-time employees) have to comply in 2015, but for the first year, they will only have to offer coverage to 70% or more of their full-time employees. The 95% requirement will not go into effect until 2016.
- For large employers that contribute to a multi-employer plan, an employer will not be subject to shared responsibility penalties with respect to employees for whom the employer is required by the collective bargaining agreement or appropriate related participation agreement to make contributions to the multi-employer plan.
- Some categories of employees are better defined:
- For volunteers for a government or tax-exempt entity (like emergency response personnel), hours they volunteer will not count in consideration of their full-time employment status.
- For teachers and other educational employees, they will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer. Also, for adjunct faculty, employers of adjunct faculty may credit them with 2 ¼ hours of service per week for each hour of teaching or classroom time.
- For those in traditionally seasonal positions where annual employment is customarily six months or less, they will not be considered full-time employees.
- For students in work-study programs, these hours will not be counted in determining whether they are full-time employees.