New Employer Rules Soften Start of Healthcare Reform

Wednesday, March 5, 2014

It is a work in progress.  There are so many moving parts to Healthcare Reform that implementing the Affordance Care Act (ACA) requires adjustments as theory meets reality.  In July 2013, the deadline for large employers to provide Minimum Essential Coverage (MEC) at affordable rates was pushed forward one year to 2015.  In February 2014, new rules gave mid-sized employers another year ― to 2016 ― to do so.  Recent guidance explains some of the ways these two types of employer can transition into compliance.

Large Employers

Large employers with at least 100 full-time employees (including full-time equivalents) still must offer affordable MEC in 2015.  However, plan years that begin in 2014 (with start dates that haven’t recently been changed) won’t have to comply until the plan year beginning in 2015. Thus, if a plan year begins in October, compliance is not required until the October 2015 plan year.  Also, the requirement that large employers offer minimum affordable coverage to all but 5%, or if greater 5, of their full-time employees (those who work at least 30 hours per week or the equivalent) has been changed. Now, for each calendar month in 2015 and any calendar month during the 2015 plan year that falls in 2016, the minimum participation rate has been reduced to 70%.  The transition rules even give additional time to employers to ensure that their plans provide dependent coverage provided they take steps to satisfy this coverage requirement during the 2015 plan year.

Mid-Sized Employers

Mid-sized employers ― that is, those with 50-99 full-time employees (including full-time equivalents) ― are still large employers who must provide affordable MEC to their full time employees. However, because mid-sized employers may find it more difficult to comply with the ACA, the new rules delay until 2016 the date on which they must offer minimum essential affordable coverage to their full-time employees.  Not so coincidentally, beginning in 2016 mid-sized employers will be eligible to obtain the coverage through the federal government’s online SHOP healthcare exchange, which was originally established to help small employers (fewer than 50 full time employees) find coverage.  The SHOP exchange is currently online at

In order to qualify for this deferred start date, an employer must certify that (a) it employed on average between 50 and fewer than 100 full time employees (including full time equivalents) during 2014, (b) there were no reductions in the size of its workforce or the overall hours of service of its employees during the period February 9, 2014, to December 31, 2014 (except for bona fide business reasons),  and (c) the health coverage  it offered as of February 9, 2014, was not eliminated or materially reduced (certain limited exceptions also apply). If these conditions are met, compliance is not required until the 2016 plan year.

While these and other changes will allow them to ease into compliance, both large and mid-size employers should not become complacent. These relaxations of the ACA’s implementation schedule do not change the underlying requirements that could subject them to significant penalties for failure to comply.