ACA Transition Relief for Some Employers

Some employers will receive relief under the Affordable Care Act’s employer mandate next year, the White House announced today.

The ACA’s employer mandate eventually will require employers of 50 or more full-time-equivalent employees to either offer health benefits to their full-time employees or face possible penalties. The mandate originally was due to take effect in 2014, but the White House last summer moved the effective date to 2015.

In a final rule issued today to explain how the mandate will work, the Obama Administration said that employers with 50 to 99 full-time-equivalent employees won’t be subject to the law’s employer-mandate penalties until 2016.

This change, and other changes in the final rule, will provide additional flexibility for employers, especially those at or near the 50 FTE-employee definition of a “large employer” under the ACA. The National Restaurant Association has been pressing regulators for these changes and will continue to do so. The NRA also continues to advocate for structural changes in the law that only Congress can address, such as the definition of full-time employee.

According to Treasury Department officials, other provisions of the final rule:

  • Make permanent the “look-back measurement method:” The final rule gives covered employers the option of using a look-back period to measure the full- or part-time status of variable-hour and seasonal employees. This measurement method can give employers more stability and predictability in knowing which employees are eligible for health care coverage under the law. The Treasury Department also clarified that seasonal employees in positions working six months or less in a year generally aren’t considered full-time employees.
  • Offer transition relief for certain employer penalties: Penalty “A” will apply under the law to covered employers who fail to offer minimum essential coverage to “substantially all” of their full-time employees. For 2015, the Treasury Department says “substantially all” means employers must offer coverage to at least 70 percent of full-time employees. Starting in 2016, covered employers must offer coverage to 95 percent of their full-time employees to avoid Penalty A.
  • Offer transition relief for employers with non-calendar-year health plans. For covered employers who offer non-calendar-year plans, the final rule clarifies that the employer mandate will take effect on the first day of their plan year in 2015, rather than Jan. 1, 2015.

The National Restaurant Association said the final rule provided additional relief for some employers and thanked the Treasury Department for working with the NRA and the Employers for Flexibility in Health Care Coalition to provide flexibility in the rule.

See the Treasury Department’s press statement and fact sheet for more information. The National Restaurant Association will update its Health Care Headquarters with further analysis of the final rule.

Still to come: The Treasury Department has not yet finalized major new reporting requirements for employers under the law. The first information reports will be required in early 2016, based on data tracked in 2015. The National Restaurant Association reiterated its concern that these rules be as streamlined as possible, since these could contain significant compliance costs for restaurants.

The NRA also called on Congress to address other parts of the law. As restaurants nationwide struggle with ACA implementation, challenges remain that now only Congress can address. The NRA asks Congress to come together in a bipartisan manner to better align the definition a full-time employee with current business practices, eliminate the duplicative automatic-enrollment provision, and simplify the determination of a small business under the law.

For continuing updates on the law, visit the NRA’s Health Care Headquarters.