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