Affordable Care Act Employer Mandate
Employers with 50+ full-time employees and/or full-time equivalents must offer medical coverage that is "affordable" and provides minimum value to at least 95% of their full-time employees and their children up to age 26 or face penalties.*
Coverage is "affordable" if employee contributions are less than 9.66%, the 2016 indexed threshold, of:
- Employee's W-2 wages (reduced by any salary reductions under a 401(k) plan or cafeteria plan)
- Employee’s monthly wages (hourly rate x 130 hours per month),
- Federal Poverty Level for a single individual
A plan must pay 60% of the cost of covered health services to provide "minimum value." The minimum value calculator is available online.
U.S.-issued expatriate plans meet the employer mandate.
Effective July 16, 2014, the employer mandate no longer applies to insured plans issued in the U.S. territories (Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and the Northern Mariana Islands). A territory may enact a comparable provision under its own law.
* Before January 2016, employers with 50-99 were not required to offer coverage, and employers with 100 or more complied if they offered coverage to at least 70% of their full-time or FTE employees.
This graphic summarizes the coverage requirements and the penalties that apply if any full-time employee purchases coverage on the Marketplace and receives a federal premium subsidy.
Public Exchange Subsidy Notices and Employer Appeal Process
Each year, public Exchanges will send Section 1411 Certification notices to employers that may owe a penalty for not complying with the Employer Mandate. These notices will alert employers if any of their employees received a subsidy through the Exchange. Employers that receive these notices will have 90 days to file an appeal if they feel the eligibility determination was made in error. Employers should become familiar with the appeals process and ensure their health benefits records are complete and accurate.
For 2016, employers may need to submit appeals by paper because Exchanges are not required to accept appeals online until 2017 (a delay from the original implementation requirement).
Read more about the 2016 Employer Notice Program from the Centers for Medicare and Medicaid Services.
Read the most recent Employer Mandate guidance:
- Final Rules Released on Information Reporting for Employers and Insurers - 3/07/2014
- 90 Day Waiting Period Final and Proposed Regulations Issued - 2/21/2014
- Employer Mandate Final Regulations Issued - 2/11/2014
- Proposed Rules on Shared Responsibility Payments Pertaining to Certain Individual and Employer-Sponsored Plans - 1/24/2014
More on Reform
PUBLIC MARKETPLACES/ EXCHANGES
Marketplaces are the government run online shopping hubs for health insurance, available in every state.
INDIVIDUAL MANDATE IN REFORM
Under health care reform law, all people must have minimum essential coverage beginning January 1, 2014.
HEALTH CARE REFORM FEES AND TAXES
New fees and taxes will generate revenue to help fund expanded programs. Employers will pay some fees while others will be paid by insurers and individuals.