1 Pay or Play Penalty - Identifying Full-Time Employees: The Look-Back Measurement Method

The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees (and dependents) or pay a penalty. This employer mandate provision is also known as the “shared responsibility” or “pay or play” rules. An ALE is only liable for a penalty if one or more of its full-time employees receives a premium tax credit or cost-sharing reduction for coverage under an Exchange.

On Feb. 12, 2014, the IRS published final regulations on the employer shared responsibility rules. Under the final regulations, ALEs that have fewer than 100 full-time (and full-time equivalent) employees generally have an additional year, until 2016, to comply with the pay or play rules. ALEs with 100 or more full-time (and full-time equivalent) employees must comply starting in 2015.

The final regulations provide guidance on how ALEs should identify full-time employees for purposes of offering health plan coverage and avoiding a pay or play penalty...Read More