Employer Actions Required

Employers need to understand the possible impact of the employer mandate on plan designs, contribution strategies and workforce planning. Of special importance is determining which employees are FTEs to whom the employer must offer coverage. Employers should work with legal counsel to draft written policies and procedures addressing the health care regulations surrounding measurement, administrative and stability periods if they have variable and seasonal employees and choose to use this safe harbor.

Additionally, employers should properly document the methodology used for determining employee full-time status, including the measurement and stability periods used under the look-back measurement method as well as accounting for breaks in service and leaves of absence. Given the nature and size of the penalties, a cautious employer will want to be sure it can adequately demonstrate compliance with the applicable requirements.


Failure to properly document full-time status and offer coverage to FTEs can expose employers to penalties under the employer mandate. For variable hour and seasonal employees, the look-back measurement and stability periods have significant impact on FTE status determination. The penalties, which apply beginning in 2015, may arise if:

  • The employer does not offer health coverage or offers coverage to less than 95 percent of its FTEs (70 percent in 2015), and at least one FTE receives a premium tax credit to help pay for coverage on an exchange; or
  • The employer offers health coverage to at least 95 percent of its FTEs (70 percent in 2015), but at least one FTE receives a premium tax credit to help pay for coverage on an exchange, which may occur because the employer did not offer coverage to that employee or because the coverage the employer offered that employee was either unaffordable to the employee or did not provide minimum value.

Please note that penalties assessed under the employer mandate are not tax deductible.