The Affordable Care Act (ACA) introduced a lot of new requirements into health insurance. One provision that recently took effect is known as the “employer mandate.” The ACA requires that companies with 100 or more full-time equivalent (FTE) employees offer health insurance to their full-time staff. This took effect on January 1, 2015. As of January 1, 2016, companies with 50 or more FTEs will be required to meet the employer mandate as well.
Understanding the ACA Employer Mandate
From the beginning, the ACA included a requirement for companies of a certain size to offer affordable health insurance to full-time staff. In addition, the definition of “full-time” was changed to those who work 30 hours or more per week, instead of the traditional 40 hours or more in a week. Companies that fail to offer affordable health insurance will face fines of up to $2,000 per full-time employee. Large companies that offer coverage to full-time staff that is unaffordable or doesn’t meet certain requirements could face a penalty of $3,000 for each employee who receives a premium tax credit to purchase insurance through the Marketplace.
Companies that employ 100 or more FTEs in the previous calendar year are subject to the mandate beginning in 2015, and companies with 50 or more FTEs in the previous calendar year are subject to the mandate in 2016 and beyond. To determine your company’s number of FTEs, first, for each month, count how many staff you have that work 30 or more hours a week (or 130 hours per month). Then, total up the number of part-time hours your staff works each month. Divide your part-time total by 120, and then add it to your initial full-time staff count. That is your monthly FTEs total. Complete this calculation for each month in the calendar year, add each month’s FTE total together, and then divide by 12 to determine your average employer size.
Many companies that employ 100 or more FTEs already offer health insurance to full-time staff. However, those that do not are now obligated under the employer mandate in 2015.
Employer Mandate Delay
Initially, the employer mandate was planned to take effect with many of the other major ACA provisions on January 1, 2014. However, the employer mandate was delayed – concerns about business readiness caused the Obama administration to wait until January 1, 2015 to begin implementing this portion of the law. As of that date, employers with 100 or more FTEs will be required to offer health insurance to full-time staff. As of January 1, 2016, this provision will apply to employers with 50 or more FTEs.
The employer mandate delay was somewhat controversial, especially since the most recent announcement occurred in a mid-term election year. Some saw the move as being a political concession to lobbyists, while ACA opponents seized the change to call again for the law’s repeal.
There have been concerns expressed about the Obama administration making changes to the effective dates in the ACA, but since these changes have generally been favorable to Americans and businesses, they have not been seriously challenged.
The ACA employer mandate may have been delayed from its originally intended effective date, but the requirement is now in effect for companies with 100 or more FTEs. These companies should begin offering health insurance options to full-time staff, or they will be required to pay a fine per employee instead. Companies with 50 or more FTEs should also be preparing for this requirement, as it will apply to them as of January 1, 2016.