Gov't Proposes Rules for Health Care Employer Mandate

WASHINGTON, D.C. -- The countdown is on for employers to comply with the employer mandate provision of the comprehensive health care reform statute passed by Congress in 2010.

The mandate is set to take effect on Jan. 1, 2014. With that date will come "significant change for many smaller companies above the 50-worker threshold, and those industries such as retail and restaurants that have lots of lower-income and part-time workers," reported the Wall Street Journal.

Late last week, the Department of the Treasury and the Internal Revenue Service released the proposed rules to implement the employer mandate requirements. Beginning on the first day of 2014, employers with at least a certain number of employees (generally 50 full-time employees and full-time equivalents) who do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees may be subject to an Employer Shared Responsibility payment if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges, according to the IRS website.

The number of employees generally includes 50 full-time workers and full-time equivalents -- a mix of full- and part-time workers, the agency added. Under the law, a "full-time employee" works an average of at least 30 hours per week.

One of the more notable issues, according to NACS, the Association for Convenience & Fuel Retailing, addressed in the proposed rules is how the employer mandate penalty is calculated. If an employer offers coverage to at least 95 percent of its eligible full-time employees, it will only be subject to the $3,000 per year mandate penalty for each employee that is not offered "affordable" coverage and receives a premium credit when enrolling in an exchange provided plan.

However, if an employer does not make an offer of coverage to at least 95 percent of its eligible full-time employees, then it will be subject to a $2,000 per year penalty multiplied by all of its employees (less the 30 employee statutory exemption) regardless of whether any of those employees are eligible for employer-provided coverage.

This proposal is in some ways better than what many employers feared, because it does not penalize large employers that intend to offer coverage to all of their full-time employees but fail to offer coverage to a few full-time employees, NACS said. Without that 95 percent provision, "employers could be severely penalized on account of simple administrative errors. At the same time, employers were hopeful the rule would only penalize employers based on the number of employees who were not offered coverage, rather than the total number of employees, but that is not the case," the association said.

The Department of Treasury and the IRS are accepting comments on the proposed rules until March 18. NACS said that as a member of the Steering Committee for the Employers for Flexibility in Healthcare Coalition, it will be working with other groups representing employers with large amounts of temporary, part-time, and seasonal employees to craft comments ensuring the administration accounts for the convenience store industry's unique characteristics as it drafts a final rule.