For an updated summary of the required provisions for The Patient Protection and Affordable Care Act (ACA), review the following details for both large and small employers.  

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Updated Employer Mandate Provision

Sep 26, 2016

September 26, 2016

Below are the updated employer requirements for the Patient Protection and Affordable Care Act (ACA).


The Patient Protection and Affordable Care Act (ACA) imposes significant requirements on employers with at least 50 full-time employees, including full-time equivalents (FTEs). These employers are referred to as ‘applicable large employers’ or ALEs. ALEs are required to offer Minimum Essential Coverage (MEC) that is affordable and also provides minimum value to substantially all full-time employees, identified according to a 30-hour work week (as defined by the ACA). If they fail to meet this requirement, employers will have to pay a corresponding penalty (Employer Shared Responsibility payment) if a full-time employee receives a premium tax credit, or cost-sharing subsidy from an exchange.

Date of Final Regulations Issued:

On Feb. 10, 2014, the U.S. Treasury Department and Internal Revenue Service released final regulations on the Employer Shared Responsibility provision (“Employer Mandate”).

Employer Mandate Requirements for Small Businesses:

For businesses with 50 to 99 FTEs, the Employer Mandate requirements are delayed until 2016. Penalties do not apply to these employers in 2015, provided they certify that they are not reducing their workforce in order to fall under the 99-employee threshold. However, reporting for these employers is still required. Employers with fewer than 50 full-time employees (including FTEs) that offered insured plans remain outside the Employer Mandate’s rules and purviews and are therefore not required to offer coverage or provide certification. However, small employers that offer self-insured plans must report under IRS Code Section 6055.

Measurement Period:

Employers may opt to use a measurement period of 3 - 12 months when evaluating employee hours to determine full-time status (30 hours per week as defined by the ACA). 

Large Employer Status Determination:

Employers will determine each year, based on their current number of employees, whether they will be considered an ALE for the next year. Employee coverage threshold: In order to meet the requirement of “offering coverage” in 2015, applicable large employers will need to offer MEC to at least 95 percent of full-time employees.

Effective Date:

The Employer Mandate was initially scheduled to go into effect starting in 2014, but was pushed back to 2015 for all employers, then (with issuance of the final regulations) pushed back again, until 2016, for the small employers described above.

Types of coverage that satisfy the requirement:

ALEs must offer major medical coverage that is affordable and provides minimum value based on a range of factors.

Types of coverage that do NOT satisfy the requirement:

Coverage that consists of excepted benefits does not provide MEC. This includes most employee assistance plans (EAPs), vision, dental, Health Flexible Spending Account (HFSA), Health Reimbursement Account (HRA) and Health Savings Account (HSA) plans.

Size of Employer Threshold:

The threshold to be considered an ALE is 50 full-time employees within the employer as a whole (based on the controlled group rules for employers with multiple corporate entities). For purposes of this determination, part-time employees’ average hours are aggregated into FTEs based on a 120-hour work month.

Employer Impact:

Employers must determine whether and when they are subject to the Employer Mandate, and then decide whether to comply or pay the corresponding penalties. Identifying employees that are benefits-eligible under the terms of the mandate, managing ongoing enrollment, and offering MEC will involve a significant effort. In addition, starting in 2016, employers will be required to report to the IRS in order to determine whether penalties apply and how much.