ACA Employer Mandate Final Regulations: An Overview

March 31, 2014 Published Work
Connecticut Bar Association Tax Newsletter

The Treasury Department recently issued final regulations under Code Section 4980H, which sets forth the shared responsibility (or "employer mandate") provisions of the Affordable Care Act ("ACA"). The final rule contains few surprises, though it does delay application of the mandate for mid-size employers until the beginning of the 2016 plan year.


The employer mandate provisions of ACA, originally slated to take effect in 2014, apply to employers that average 50 or more full-time employees during the preceding calendar year ("Applicable Large Employers" or "ALEs"). For the limited purpose of determining ALE status only, an employer must count full-time employees and full-time equivalent employees. ACA defines full-time employee, for ALE and all other employer mandate purposes, as an employee who works at least 30 hours per week. 1

Under the employer mandate, ALEs that do not offer affordable, minimum value health coverage to full-time employees risk annual monetary penalties.

The penalty for failure to offer coverage (the "no offer" penalty) will be assessed if (1) the employer fails to offer coverage to all its full-time employees, (2) one of the affected full-time employees gets coverage through the exchange operating in that state, and (3) qualifies for a subsidy through the exchange. An individual who obtains coverage through an exchange will qualify for a subsidy if his or her household income is between 100% and 400% of the federal poverty level. The annual no offer penalty is $2,000 per full-time employee (disregarding the first 30 full-time employees).

1Treas.Reg. § 54.4980H-2(b).