New One-Year Delay of the Health Insurance Mandate for Midsized Employers

On February 10, 2014, the IRS announced that employers with 50 to 99 full-time employees (counting “equivalents”) may wait until January 1, 2016 to comply with the requirement for “large” employers to offer affordable, minimum essential health insurance coverage to their full-time employees.  The start of the employer mandate was previously delayed from January 1, 2014 to January 1, 2015.  With this announcement, there are three categories of employers: 

1.     Small employers with less than 50 FTEQs, not subject to the mandate,

2.     Midsize employers with 50 but less than 100 FTEQs, subject to the mandate beginning January 1, 2016, and

3.     Large employers with 100 or more FTEQs, subject to the mandate beginning January 1, 2015.

To qualify for the delay, the IRS says that employers must not reduce their workforce or hours of service in order to qualify and they must maintain their previously offered health insurance.

For large employers, new regulations phase-in the percentage of full-time employees that must be offered affordable, minimum essential health insurance.  For 2015, at least 70% must be offered insurance.  The percentage rises to 95% in 2016 and beyond.