Employer Mandate Information
Starting in 2014, employers with more than 50 full-time employees during the year are required to offer either qualified health insurance to their employees or pay a penalty if they have at least one full-time employee who receives a premium tax credit. If one employee receives this credit, the company is assessed a fee of $2,000 per full-time employee, excluding the first 30 employees.
For example, a company with 75 full-time employees does not offer insurance. If one of the employees buys insurance through the Health Insurance Exchange and receives a premium tax credit, the company is now liable for a fee of $90,000 (75-30 X $2,000) unless they decide to offer qualified coverage.
If the company offers health insurance that would cost the employee more than 9.5% of their income, the employee may decline and purchase insurance through the Exchange. If the employee receives a tax credit through the Exchange, the employer is liable for a fee of the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees from the assessment.
Finally, if the employer offers insurance, the employer must offer what the legislation refers to as “free-choice vouchers” to employees whose share of the premium for employer-sponsored coverage would be between 8% and 9.5% of their income. The amount of an employee’s voucher would equal the contribution the employer would make to its own health plan on behalf of the employee, and the employee could use the voucher to purchase insurance in the Exchange. Employees receiving free-choice vouchers are not eligible for premium tax credit subsidies.
The term ‘full-time employee’ means an employee who works on average at least 30 hours per week. An employer is not said to employ more than 50 full-time employees if the employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and the employees in excess of 50 employed during such 120-day period were seasonal workers.
(Note Section 1511-1515: Employers Responsibilities)
Additional Mandates
Employers that DO offer coverage and have more than 200 employees must automatically enroll their employees in the employer-offered lowest cost health care plan. This automatic enrollment program must include adequate notice and the opportunity for an employee to opt out of any coverage that individual was automatically enrolled in. Effective date is in 2014, but could happen before since law gives discretion to Health and Human Services to decide when this requirement must start.
Any employer offering employer-sponsored insurance may not impose any waiting period in excess of 90 days (for both individual and family coverage) starting in 2014. However, there will be no fee imposed on employers that require waiting periods up to 90 days before employees could enroll in an employer-sponsored plan. Periods over 90 days would impose a $600 tax penalty on employers.
(Note Section 1511 Automatic Enrollment For Employees Of Large Employers and Section 2708: Prohibition On Excessive Waiting Period)
For questions or additional information on Employer Mandates, please email COSE’s advocacy team.