ANDY COBURN ATTORNEY WYCHE LAW FIRM
T L AW
he federal healthcare reform law creates a lot of anxiety, in large part because it is so complex that people really don’t have a clear idea of how they will be affected. One key part of the reform that has many employers concerned is the so called “pay-or-play” employer mandate.The proposed regulations are over 100 pages long, but we can provide a brief summary, offer a few key points and outline a game plan for tackling the mandate. What is the mandate and which employers are subject to it? The reform law requires large employers to offer certain minimum health benefits to their employees or such employers are required to pay a penalty to the federal government. An employer generally is a “large employer” if it employs more than 50 employees. For purposes of determining whether a company is a large employer, full-time equivalents (FTEs) are taken into account. The number of FTEs is calculated based on all of the hours worked by part-time employees; a full-time employee is generally an employee working at least 30 hours per week. What is the penalty if an employer does not comply with the mandate? If a company is subject to the mandate and does not offer any health care coverage, the company must pay a penalty of $2,000 per year for each full-time employee (excluding the first 30 full-time employees) if any full-time employee enrolls for health care coverage through one of the health insurance exchanges
HEALTHCARE REFORM— THE EMPLOYER PAY OR PLAY MANDATE About the author...
As an attorney with Wyche, Andy regularly represents clients in mergers and acquisitions, reorganizations, structuring of joint ventures, securities offerings and other financing transactions. He has extensive experience with growing companies and private placements of securities.Andy also advises and assists public and private company clients in the design and implementation of executive compensation arrangements, equity compensation plans and broad-based employee benefits. Outside of his legal profession, Andy is on the board of the Greenville Little Theatre, a project leader for Habitat for Humanity, and serves as a Business Black Box advisor in law.
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that are to be established under the health reform law. If the company offers health care coverage but it does not meet the minimum federal requirements, the company must pay a penalty of $3,000 per year, but only for each full-time employee, if any, that has enrolled for coverage through a health care exchange. No penalty is due with respect to part-time employees, regardless of the health care coverage that the employer provides or fails to provide. Some key points: • If you don’t have 50 employees (including FTEs), you are not subject to the mandate. • Many employers with good health benefits already offer coverage that meets the requirements of the mandate, so they will not pay any penalty or have to make any changes to their health care coverage. • If you have one or more companies that are related to each other (generally through common ownership or control), consult with an attorney to see if the companies will be considered a single “employer” in determining whether the mandate applies. • Not all full-time employees will be eligible to enroll for coverage through an exchange. Eligibility is restricted by certain income and other requirements. • If you are in a business that uses a lot of part-time or contract workers (for example, staffing, hospitality, construction), you should consult with a healthcare reform expert on how the mandate may apply to you. Plan of attack: • Determine whether you are subject to the mandate or not. • If you are subject, determine whether you already offer health benefits that meet the mandate requirements. • If you are subject to the mandate and don’t offer coverage that meets the requirements, determine your options and the advantages and disadvantages of each. • Make sure you get expert advice in determining whether and how the mandate may apply to you. The proposed rules are highly detailed and technical, and many in the health care field do not fully understand how the rules apply. For more on this topic visit InsideBlackBox.com/law