Even the nation’s largest employers got a significant concession: They can avoid a fine by offering coverage to 70 percent of their full-time employees in 2015 and 95 percent starting in 2016. Under an earlier proposal, employers with at least 50 employees would have been required to offer insurance, beginning 2015, to 95 percent of those who work 30 hours or more a week, along with their dependents.
The regulation finalized by the Treasury Department involves one of the biggest issues surrounding the Affordable Care Act: how the law’s employer mandate plays out in practice. The mandate has enormous ramifications for how businesses classify their employees and how much these men and women work.
Initially, these requirements — which affect firms employing 72 percent of all Americans — were supposed to take effect this year, at the same time that most individuals faced a new obligation to obtain health insurance or risk a tax penalty. Last July, the administration announced it would delaythe regulation for a year after many employers and some unions complained about the law’s reporting requirements and classification system for workers.
A senior administration official, who briefed reporters on the proposal on the condition of anonymity because the rule was not yet public, said the Treasury Department decided to allow medium-sized businesses more flexibility because they “need a little more time to adjust to providing coverage.”
Businesses that fail to offer coverage face a fine of up to $2,000 for each employee that is not covered, though workers are not required to sign up for the benefits.
The coverage must encompass a core set of benefits and be affordable — which the law defines as premiums costing no more than 9.5 percent of an employee’s income — and the employer must pay for the equivalent of 60 percent of the cost of coverage for workers but not their dependents.
Until now, the government had not defined exactly which workers should be considered full-time. Nor had it spelled out important details of the insurance benefits that employer-sponsored health plans must cover, given that they are not the same as the “essential benefits” required of health plans that are sold to individuals or small businesses through the new federal insurance exchange, HealthCare.gov.
Brian Haile, senior vice president for health care policy at Jackson Hewitt, said the announcement was significant because how the federal government defines a full-time employee will affect hiring decisions across the country.
“This final rule may seem like an obscure accounting matter, but it gets to the heart of whether and how employers hire new workers — and whether these workers will have the opportunity to transition from part-time to full-time or seasonal to permanent employment,” Haile said. “This rule hits on a core question as to how employment is structured in the United States.”
Administration officials said that organizations with a large number of volunteer employees — such as firefighters and first responders — would not have to provide coverage, along with those hiring seasonal employers who work six months or less in a given year.
Teachers will not be considered part-time just because they do not work for three months during the summer, officials added, while the status of adjunct faculty will be calculated on a formula where they would receive credit for 2¼ hours of service per week for each hour they spent teaching or in the classroom.