Legal Alerts

11 Feb 2014

Penalties Under The Affordable Care Act Delayed For A Year For Certain Employers

Yesterday, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued a new timetable and final regulations for implementing the employer-shared responsibility provisions under the Affordable Care Act (ACA). Previously, the employer responsibility rules require certain employers to either offer their full-time employees affordable, minimum value health coverage or pay penalties beginning in 2015. 

The new regulations will affect employers in the following way: 

  • Employers with 50 to 99 employees that do not yet provide quality, affordable health insurance to their full-time employees will report on their employees and coverage for 2015, but they have until 2016 before any employer-responsibility payments (i.e., penalties) apply. 
  • Large employers with 100 or more employees must offer coverage to 70 percent of their full- time employees in 2015 to avoid paying a penalty. In 2016 and beyond, that percentage increases to 95 percent. 
  • Small Employers with fewer than 50 employees are not required to provide coverage or fill out any forms in 2015, or in any other year under the ACA. 

Importantly, employers with fewer than 100 employees will be required to certify to the government that they haven’t fired employees to get under the threshold and thereby qualify for the delay until 2016. However, employers are still permitted to cut their workforce due to economic reasons.

In addition, under the final regulations various employee categories are clarified in determining full-time employment for purposes of health coverage:

  • Hours worked by bona fide volunteers for a governmental or tax-exempt entity will not cause full-time employment.
  • Teachers and education employees who do not work during certain periods when the school is not operating are not part-time for that portion of the year.
  • Seasonal employees for which the customary annual employment is 6 months or less generally are NOT full-time employees.
  • Hours worked by students in work-study programs will not cause full-time employment.
  • Adjunct faculty can be credited with 2 ¼ hours for each hour of teaching or classroom time.

Several transitional rules are also allowed:

  • Employers can determine whether they have 100 or more full-time and full-time equivalent employees using a 6-month look-back period instead of a year.
  • Non-calendar year plans must comply beginning at the first new plan year after Jan. 1, 2015.
  • Dependents do not have to be offered coverage in 2015 if employers intend to comply by providing dependent coverage in 2016.
  • In 2014 for 2015 compliance, a 6-month look-back period may be used with the 2015 12-month coverage period for variable hour employees.

If you have any questions about this or any other health care reform related matter, please contact Dannae Delano at or Jamie Westbrook at

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