The health care law's employer mandate arrived Jan. 1

Aug 27
Note: This content is provided in collaboration with UnitedHealthcare, an alliance of the National Restaurant Association; and is for informational purposes only. See below for contact information.
The Affordable Care Act's employer mandate is here - and it's not too late for covered businesses to comply and avoid monthly accrued penalties.
What's the employer mandate? 
Effective Jan. 1, 2015, the ACA imposed a mandate that requires certain businesses to either provide medical coverage or face possible penalties.
The mandate will eventually apply to employers with 50 or more full-time or full-time-equivalent (FTE) employees. The penalties generally went into effect in 2015 for employers with 100 or more full-time employees or FTEs, and will take effect in 2016 for employers with 50 to 99 full-time employees or FTEs. The employer mandate does not apply to small groups with 2 to 49 employees.
Health benefits requirements To avoid monthly penalties, covered employers must offer full-time employees health benefits that meet these requirements:
  1. Provide minimum essential coverage (MEC). MEC must be offered in the small or large group health insurance market and be a group health plan under the Employee Retirement Income Security Act (ERISA). The following plan types alone will not constitute MEC: disability, accident, critical illness and indemnity.
  2. Be affordable to the employee. The required share of the employee's premium for self-only coverage must not exceed 9.5 percent of an employee's household income. Under the ACA's employer-mandate rules, employers can use one of three safe harbor tests to determine affordability.
  3. Satisfy the minimum value requirement. The health plan must pay at least 60 percent or more of the plan's total allowed benefit costs anticipated for a standard population.
  4. Offer health insurance coverage to dependent children up to the age of 26. Coverage does not have to be offered to spouses, foster children or stepchildren. A child who is not a U.S. citizen or national is excluded from the definition of dependent unless that child is a resident of a country contiguous to the United States or is within the exception for adopted children provided by applicable law. The requirement to cover eligible dependents will not apply to a covered large employer in 2015 as long as the employer is taking steps to arrange for health benefit coverage to begin in 2016.
The ACA does not explicitly mandate that all employers have to offer medical coverage. But if covered employers fail to offer the required coverage to full-time employees and their eligible dependents, there are two potential penalties:
  • Penalty A¹ - Employers not offering medical coverage that provides MEC or any health insurance coverage. If an employer does not offer any medical coverage or medical coverage that provides MEC to at least 70 percent of their full-time employees, and one or more full-time employee or eligible dependent(s) qualifies for a premium tax credit or cost-sharing reduction through a public insurance exchange, also called a Health Insurance Marketplace, the employer could be subject to a penalty. The annual penalty is $2,000 per year, per full-time employee. When calculating the penalty during 2015, the first 80 full-time employees are subtracted from the payment calculation. After 2015, only the first 30 full-time employees will be subtracted from the payment calculations. This penalty is assessed per full-time employee for each month an employer does not offer MEC to its employees.
  • Penalty B² - Employers offering unaffordable coverage. If an employer offers medical coverage or medical coverage that provides MEC but the full-time employee's contribution is deemed unaffordable for even just one employee, and/or does not meet the minimum-value standard outlined in the employer-mandate requirements, full-time employees may obtain health insurance through a public insurance exchange and qualify for a premium credit or cost-sharing reduction. The annual penalty of $3,000 per year, per full-time employee would apply if an employee applied to a public insurance exchange and was deemed eligible for a subsidy. This penalty is assessed per full-time employee who receives a premium tax credit or cost-sharing reduction for each month the employee qualifies for such assistance and for which the employer receives a Section 1411 Certification.
Together, the National Restaurant Association and UnitedHealthcare offer health care reform guidance and solutions. We can help you navigate through the ACA's employer mandate and mitigate the financial penalties of non-compliance.
For more information, contact Clinton Wolf at (312) 348-7064 or
¹The ACA has not assigned titles to either penalty. The titles "Penalty A" and "Penalty B" are being used for explanation only. The penalty amounts listed are annual amounts if the employer is non-compliant, but will be assessed on a pro-rated basis for each month the employer is non-compliant.
²The penalties are estimates based on the 2014 implementation. Although delayed, the penalties are still to be adjusted annually, so these amounts are estimates based upon 2014 numbers.
This communication is not intended, nor should it be construed, as legal or tax advice. Please contact a competent legal or tax professional for legal advice, tax treatment and restrictions. Federal and state laws and regulations are subject to change.
Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by United HealthCare Services, Inc. or their affiliates. Health Plan coverage provided by or through a UnitedHealthcare company.
Information provided by the National Restaurant Association  who offers its members information, resources and tools at the NRA Health Care HQ.


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