The Patient Protection and Affordable Care Act (PPACA) employer "shared responsibility" mandate, originally set to take effect in January 2014 but delayed last year until 2015, will now be phased in so that midsize employers will not be subject to "play-or-pay" penalties until 2016, the Treasury Department announced on Feb. 10, 2014. The department issued a new final rule and related questions and answers on Employer Shared Responsibility Under the Affordable Care Act.
Treasury defines midsize organizations as those with the equivalent of 50 to 99 full-time employees, and, according to the agency, they represent about 2 percent of U.S. employers. Businesses with fewer than 50 full-time equivalent workers, which make up about 96 percent of all employers, are not subject to the play-or-pay provisions.
Another new rule phasing in the play-or-pay requirement states that organizations with 100 or more employees (about 2 percent of employers) must offer coverage only to 70 percent or more of full-time employees in 2015, to avoid penalties, and to 95 percent of full-timers in 2016 and beyond.
Reaction to Delay
Rep. Eric Cantor, R-Va., criticized the delays, claiming that the president “selectively delays parts of Obamacare in order to put off more negative consequences until after Election Day. Much like the individual mandate, the business mandate is bad for middle-class families, and it will harm economic growth. But the answer to this problem is not random unilateral changes, stoking uncertainty.”
He added: “House Republicans opposed Obamacare when it was passed precisely because of the negative effects the president is now trying to hide. It’s time to stop creating more chaos and delay Obamacare for all Americans.”
But according to Paul Hamburger, an attorney at Proskauer in Washington, D.C., “Employers will welcome the various transition rules that have been carried over from 2014 to 2015 and beyond. At the same time, they need to carefully review all of the intricacies and details as they plan to manage their exposure to share responsibility penalty payments.”
Hamburger continued: “Businesses need to start taking Obamacare seriously despite some relief being given with the guidance released today. The administration tried to acknowledge that it is listening to employer comments—an attempt to ease them into the [PPACA] regulations—while filling in some, though not all, of the gaps as the industry tries to capture a complete picture of what we’ll need to do for 2015 and 2016.
“Although today’s guidance provided some helpful transition and other rules, it did not address fully other very important matters, such as providing some relief related to worker-classification and staffing-agency issues and relief for employers in high-turnover industries.”
Among additional provisions in Treasury's final rule are the following clarifications:
Volunteers. The hours that bona fide volunteers, such as volunteer firefighters and emergency responders, contribute for a government or tax-exempt entity will not cause them to be considered full-time employees.
Teachers. Teachers and other education professionals will not be treated as part-timers for the year simply because their school is closed or operating on a limited schedule during the summer.
Seasonal employees. Those in positions for which the customary annual employment is six months or less generally will not be considered full-time employees.
Students in work-study programs. Services that students provide under federal or state work-study programs will not be counted in determining whether they are full-time employees.
Adjunct faculty. Until further guidance is issued, employers of adjunct faculty may use a method of crediting hours of service that is reasonable in the circumstances and consistent with the employer-responsibility provisions. The final rule allows an institution to credit an adjunct faculty member with 2¼ hours of service per week for each hour of teaching or classroom time.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.