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How to Coordinate COBRA with PPACA as Open Enrollment Ends


COBRA CONUNDRUMS is reprinted from the March, 2014 issue of Health Insurance Underwriter Magazine featuring our very own Robert Meyers.

Under PPACA, the open enrollment period for 2014 Marketplace coverage ends on March 31, 2014. If your clients offer health benefits, this date is important because of its impact on COBRA coordination. This is the first of several articles in which I will outline how to coordinate COBRA administration with PPACA after open enrollment ends on March 31. 

As you already know, the responsibility to provide COBRA continuation coverage did not end with health reform. In fact, thanks to PPACA, COBRA administration has become more important and more complex for a number of reasons – some of which we’ll cover here. 

While employers do not have to be Marketplace experts, they certainly need to stay informed. Their employees and former employees will likely rely on them (and you as their broker) for answers as they evaluate their health insurance options during times of transition.

Benefit Availability is of Key Concern After April 1

Of course, employees will continue to change jobs and experience other benefit-eligibility triggering events between April 1 and the next Marketplace open enrollment period, which begins November 15, 2014.  As you’ll see in the chart below, all of the qualifying events associated with COBRA are now also considered triggering life events under PPACA and cause special Marketplace enrollment to be available when they occur. And, under PPACA, there are several additional triggering events that do not apply to COBRA, shown in red.


Events that Trigger COBRA-Eligibility

Events that Trigger Special Enrollment ACA-Eligibility

Termination of Employment

Reduction in Hours




New Employment

Loss of Dependent Status

Becoming Eligible for Medicare

Exhausting COBRA benefits

Loss of eligibility for Medicaid CHIP




Income changes (For those already enrolled in the Marketplace)




Change in immigration status




Error by a government agency or navigator




Move to a state outside one’s plan area




(*Details in this chart may change as the ACA rollout evolves.) 

Timelines and Notable Details

Note: Under PPACA, eligible individuals have 60 days to complete their special enrollment period and coincidentally, the COBRA election period also has 60 days. However, it is unclear if the calculation of the dates is identical, so for now let’s just note the similarity.

For the life events that trigger both COBRA and PPACA eligibility, individuals can choose between COBRA or Marketplace coverage. However, events that cause special enrollment in the Marketplace do not also allow them to access benefits outside the Marketplace.

The important thing for brokers to communicate to clients is that COBRA is ongoing and timely COBRA notices continue to be essential – even when individuals can also access coverage through the Marketplace.

Also, if qualified beneficiaries are actively participating in COBRA, they can only go to the Marketplace when their COBRA benefits are exhausted. If they simply stop paying COBRA premiums, they cannot access the Marketplace until the next open enrollment period. 

It is also worth noting that active employees who have access to coverage through their employers can go to the Marketplace during open enrollment to shop for alternate benefit packages. However, it is unlikely they will be eligible for the subsidy because employer-sponsored coverage is available.

In Summary

The first open enrollment period is almost over and many politicians will breathe a temporary sigh of relief. Both sides will try to claim victory. Meanwhile, those of us who deal with this every day will be very, very, busy. By staying on top of the details and keeping your clients informed, you can help employers claim the victory of achieving compliance during a very complex and challenging time!

How Does IRS Same-Sex Guidance Impact COBRA Administration?


In 2012 the United States Supreme Court ruled on United States v. Windsor, recognizing the legitimacy of legal same-sex marriage for the purpose of federal law.

In 2014, the IRS released guidance on how that decision will affect employer-sponsored retirement plans.

You wouldn’t think these events would have any impact on COBRA; at least not at first glance. After all, the new IRS guidance was limited to retirement plans qualified under Internal Revenue Code Section 401.

By upholding Windsor, the Supreme Court struck down the Defense of Marriage Act (DOMA) – those waves are much bigger and are not limited to the retirement plan community.

Before Windsor, DOMA defined the word “marriage” to mean the legal union of one man and one woman. DOMA allowed plans to withhold benefits from same-sex couples who had been legally married in a State or country where same-sex marriage was allowed. 

“DOMA’s limitations on the definitions of ‘marriage’ and ‘spouse’ affected a myriad of federal laws, including the Internal Revenue Code, ERISA, COBRA, and HIPAA, and thus deprived same-sex couples legally married under the laws of certain states of certain legal protections and preferred tax treatment under spousal retirement and health care benefits” (source).

With the end of DOMA, those effects have come undone. As a result, the federal laws which had been affected are no longer operating on DOMA’s definition. In short, Windsor represents ground-shaking political changes with extraordinary personal ramifications for many Americans – and it affects COBRA, too.  Still, not everything’s different. Here’s how the ruling does (and doesn’t) affect COBRA.

What’s Different?

By lifting DOMA’s restriction on what it means to be married, the Supreme Court required COBRA coverage to extend to an employee’s same-sex spouse.

If you’re an employer or HR manager, take note! The Windsor decision means that if your employee is legally married to someone of the same sex, you must offer COBRA to their spouse.

What’s the Same?

Otherwise, your responsibilities as an employer remain unchanged. As always, it’s your duty to provide your COBRA administrator with accurate information about your employees. And as always, one facet of that information is their legally married status.

Questions about these developments? Please don’t hesitate to contact us. We’re happy to provide COBRA administration information and guidance whenever you need it.

Could you benefit from having access to COBRA info and tools right at your fingertips? Take a look at our proprietary web-based solution by requesting a demo here.


Should Subsidies Apply to Marketplace Plans Only?


COBRA-PoliciesThere’s been a controversy in recent news concerning subsidies in the public marketplace. While it sounds crazy, it’s possible the federal exchange subsidies could get junked.

According to a recent NY Times article:

“Plaintiffs in the case, Halbig v. Sebelius ... say the plain language of the law makes subsidies available only to people who buy insurance through marketplaces established by States” (source).

To make their case, the plaintiffs are calling into question an IRS rule which allows individuals to claim subsidies when buying insurance in the federal marketplace. At first glance, it looks like a loophole argument: obviously the Affordable Care Act did not intend to make it impossible for people to access subsidies through the federal exchange.

Still, it’s an argument that two out of three federal judges on a panel seem willing to hear out.

The Subsidy Debate

The ACA uses subsidies to guarantee affordable insurance to every American. As of this February, 4.2 million Americans had purchased insurance. Of those, 2.6 bought it through the federal exchange, four-fifths of whom qualified for subsidies.

If shoppers in the federal exchange are no longer eligible for subsidies, it could pose a serious problem for the ACA. Bear in mind, only 14 States have their own exchanges; the federal marketplace serves the remaining 36. To cut subsidies out of the federal marketplace would be to cut them out of 36 States. Could the ACA survive such a blow?

Here’s a different question. Why must the subsidy be limited to public exchanges (State or federal) in the first place?

As long as a private plan meets or exceeds ACA requirements, why can’t Americans also benefit from the subsidy when buying from a private insurer?

The COBRA Case

As it stands, if former employees purchase COBRA policies, they cannot benefit from the ACA tax credit at the end of the year.

Even if they lose their jobs mid-year after already meeting their deductibles, or if they’re in the middle of treatments, if they’re depending on the subsidy to afford coverage, they’ll be forced to switch plans and start over.

Low- and no-income people are the ones who most need the ACA subsidy. These are the same people that COBRA is designed to serve. Yet as a private plan, COBRA is not an option for those who need subsidy to purchase insurance, despite the fact that in many cases, COBRA is by far the least disruptive option. COBRA allows former employees and beneficiaries to keep their existing health care plans and provider networks, and allows continuations so they don’t have to restart their deductibles or out-of-pocket expenses with a new plan mid-year.

The Bigger Issue

As the COBRA case makes it plain, sometimes the best insurance option is not available in the public marketplace.

This poses a bigger question: Is it right to withhold private plans from low-income Americans?

The ACA was developed with the goal of getting everyone insured. If a plan outside the marketplace better meets a family’s needs – and if that family is relying on the subsidy to afford insurance at all – why shouldn’t the family have access to the plan that serves them best?

Once again: what does it matter where the insurance comes from, as long as it meets ACA requirements?

Stay informed! This issue could become a game-changer for unemployed customers, based on how the courts decide to rule. Let us know your thoughts on this issue by posting a comment below.

Avoid Shared Responsibility Payments with Three Safe Harbors


ACA-UpdateLast month, we shared an update from Jason M. Cogdill providing guidance from the IRS on the Affordable Care Act’s Employer Mandate.

A major provision of the Employer Mandate is the Employer Shared Responsibility payment, which kicks in when a company does not offer health coverage, or it offers coverage to fewer than 95% of its full-time employees and their dependents. The payment is assessed even if only one of those full-time employees receives a premium tax credit on an Exchange. The shared responsibility payment also applies even if an employer provides coverage to at least 95% of its full-time employees, and one employee receives a tax credit to pay for coverage on an Exchange, because the employer plan was not affordable, or the coverage did not provide minimum value.

The final regulations from the IRS and Treasury Department, however, provide three affordability safe harbor provisions for employers. The Affordable Care Act considers a plan affordable if your employees’ contributions are less than or equal to 9.5% of their household income. The safe harbors, which are optional, are available because employers will not always know their employees’ household incomes. This can be a huge obstacle for determining whether your company’s health care plan is affordable or not.

The three optional safe harbors are: 

  1. The Form W-2 Safe Harbor: This safe harbor, as its title suggests, based on the wages listed in Box 1 of an employee’s W-2 form. As long as the employee’s required plan contribution for the calendar year does not exceed 9.5% of wages, the employer satisfies the Form W-2 Safe Harbor. At the end of the calendar year, check your employees’ wages and their required contributions. To be eligible, your employees’ required contributions have to be consistent for the entire calendar year.
  2. The Rate of Pay Safe Harbor: This type of safe harbor is based on hourly employees’ rate of pay at the start of the health care coverage period, and it applies even if the employees’ rate of pay decreased. To determine eligibility for this safe harbor, take an employee’s lowest rate of pay for the month coverage began; multiply that rate by 130 (the number of hours it takes for an hourly employee to be full-time for a month’s duration); and then determine affordability if the employee’s contribution is equal to or lower than 9.5% of that month’s wages.
  3. The Federal Poverty Line (FPL) Safe Harbor: Coverage is considered affordable under this safe harbor if an employee’s contribution (for the year) doesn’t exceed 9.5% of the federal poverty line for a single individual in that calendar year. This safe harbor is ideal for employers of workers whose wages are too low to qualify for Exchange subsidies.

As always, we appreciate the opportunity to keep you informed about the changing healthcare and COBRA landscapes. Please subscribe to our COBRA blog if you haven’t already done so in the upper right corner of this screen. Wondering about how to streamline your COBRA administration load? Request a COBRATrak demo.

Marketplace Open Enrollment Ends - What About COBRA Folks?


Cobra-CoverageWell, this week marked the end of open enrollment on the healthcare exchange and the next open enrollment won't be open until November 15.  So what about folks who are on COBRA or experience a COBRA qualifying event between now and then?

First, for those on COBRA.  If people are on COBRA continuation currently they will need to stay on it until their COBRA ends, or they have an event which triggers another special enrollment period.  The ACA does not allow people whom have active COBRA coverage to discontinue their COBRA to purchase a plan through the marketplace.  If you're wondering why, good question. defines Special Enrollment as "A time outside of the Open Enrollment period during which you and your family have a right to sign up for health coverage. In the Marketplace, you generally qualify for a special enrollment period of 60 days following certain life events that involve a change in family status (for example, marriage or birth of a child) or loss of other health coverage. If you don’t have a special enrollment period, you can’t buy insurance through the Marketplace until the next Open Enrollment period. Job-based plans generally allow special enrollment periods of 30 days."

So, how do you replace COBRA with Marketplace Coverage?

Outside Open Enrollment, your choices and savings will depend on whether your COBRA coverage is running out or you’re ending it early.

  • If your COBRA coverage is ending outside Open Enrollment, you qualify for a special enrollment period. This means you can enroll in a private health plan through the Marketplace. You may qualify for tax credits that can lower your monthly premiums and for lower out-of-pocket costs. This will depend on your household size and income.
  • If you’re ending your COBRA coverage early outside Open Enrollment, you will not be able to enroll in a Marketplace plan at all, with or without lower costs.

During the next Open Enrollment period, or when your COBRA coverage expires, you could enroll in a Marketplace plan and be eligible to get premium tax credits and lower out-of-pocket costs, depending on your income.

If you’re planning to replace your COBRA coverage, it’s important not to let your COBRA coverage end before your Marketplace plan starts. Otherwise there will be a gap in your coverage.

COBRA CONUNDRUMS - Are 29’ers Eligible for COBRA?


COBRA CONUNDRUMS is reprinted from the February, 2014 issue of Health Insurance Underwriter Magazine featuring our very own Robert Meyers.

If you've been paying attention to all the twists, turns, and nuances of the Affordable Care Act (ACA) rollout, you've seen and heard all of the concern around a new demographic in the workforce known as the “'29’ers.” 

29'ers are people whose employers reduced them from full time status to part time status by reducing their work hours per week to less than 30 hours. As you recall, the Affordable Care Act mandate applies to full time employees working more than 30 hours per week. To sidestep the mandate and the requirement to pay for health insurance, some employers reconfigured their workforces – reducing full time employees to part time status prior to 2014. As a result, they will not have to offer health insurance to those individuals under the Affordable Care Act.

What does this have to do with COBRA? Well remember, there are six COBRA qualifying events including:

  1. Termination
  2. Reduction in Hours (employees who went from FT to PT)
  3. Divorce
  4. Entitlement to Medicare
  5. Death of Employee
  6. Loss of Dependent Status (Now age 27) 
  7. Well, those events are still COBRA qualifying events

So, if reduction in hours is a COBRA qualifying event, are 29’ers eligible for COBRA? If so, when?

This is where it gets a bit challenging. Many employers made the change and communicated it to their employees in the course of their open enrollments last fall. So, should those employers offer COBRA to 29’ers before the reduction in hours takes effect or should they wait and offer COBRA once the coverage has been lost? If you guessed the latter, you're right. A COBRA qualifying event must cause a loss in coverage. Therefore, COBRA starts when the loss has actually occurred.

As such, employers subject to COBRA (more than 20 employees) will need to be prepared to send appropriate and timely COBRA Election Notices to 29ers within 14 days of loss of coverage. They also need to be prepared to manage or outsource all the tasks inherent to COBRA administration – from election tracking, to enrollment and premium collection and carrier remittance. For the “reduction in hours” qualifying event, employers must provide 18 months of COBRA continuation coverage. For employers with significant workforce changes, this could represent a significant added burden for the human resource team.

True, many employees may elect to buy coverage through the Marketplace, but even so, the employer is obligated to provide the COBRA election notice and document the failure to elect coverage if and when it occurs. If employees research Marketplace options, they may discover they are not eligible for health insurance subsidies because they have access to employer-provided coverage or access to the spouse’s plan midterm due to the COBRA-qualifying event. In addition, if employees become COBRA-eligible mid-year, they may prefer to continue their existing coverage through COBRA so they can avoid restarting deductible and out-of-pocket thresholds and/or changing networks.

How Many Employees Are Affected?

While there are no official numbers, Investor’s Business Daily’s Obamacare scorecard counts 388 employers that have cut work hours and staffing levels. While cuts were mainly expected in low wage industries such as retail, hospitality and leisure, their list of 388 includes white collar industries and school districts, suggesting that the scope of the 29’er phenomenon may be farther reaching than originally presumed.

A 2013 survey conducted by the International Foundation of Employee Benefit Plans, “2013 Employer-Sponsored Health Care: ACA’s Impact,” found that 17 percent of small employers (with less than 50 employees) have or plan to reduce their workforces due to costs associated with the ACA. Only 3 percent of employers with more than 50 employees have or plan workforce reductions. The study reports that the vast majority (69 percent) of organizations say they plan to continue providing coverage when exchanges open in 2014, primarily to retain and attract talented employees. That percentage is up from 2012, when 46 percent of organizations definitely planned to continue coverage. 

Implications for Health Insurance Professionals

If you are an insurance professional, the 29’er situation could create some challenging questions. Your clients rely on you to have thought through these complex situations and see you as their trusted advisor. Make sure to alert your clients of this unexpected consequence of cutting work hours. It’s one more component they should factor in to their ACA-compliance strategy. In the wake of all of the health reform havoc, your clients will appreciate your proactive advice and expertise – and a heads-up about the COBRA consequences of workforce reduction. 

12 Employee Appreciation Ideas for This Friday and Beyond


HR-Best-PracticesNational Employee Appreciation Day is this Friday. In honor of the event, you may want let your employees know that you appreciate them this week. But, why stop there when you can express employee appreciation all year long?

Some may feel that every day is employee appreciation day. (Or, as Don Draper once said on Mad Men: “That’s what the money’s for!”) Chances are, however, that your employees may feel differently. And, career site Glassdoor noted 80% of employees work harder when a boss “shows appreciation for their work.” 

With appreciation and working harder in mind, here are 12 simple ideas to keep your employees inspired throughout the year: 

  1. Cards: Even in an age of e-mails, texts and PowerPoints, there’s something nice about a handwritten card. Think of it as a way to practice your penmanship while letting employees know that you think they’ve done a great job for the company.
  2. Catered Lunch: A catered lunch from a favorite eatery is always a popular choice. For extra fun, add make-your-own sundaes or gourmet cupcakes for dessert.
  3. Tickets: Depending on your state, company culture and local laws, lottery tickets might be an ideal gift for some employees. If gambling isn’t your (or your employees’) style, then movie tickets would be just as welcome.
  4. Gift Cards: Many employees would love to drink a cup of coffee (or two) on the company’s dime. You can also buy gift cards in bulk at local restaurants or high-end grocery stores.
  5. Company-Wide Car Wash: Hire a car washing company or a group of local high school kids to come to parking lot and wash and vacuum employees’ cars.
  6. Massage Therapy: You can arrange a mass massage therapy session by hiring a provider to prove onsite massages throughout the day.
  7. Movie Day: Treat your staff to a matinee at the local cinema. Be sure to pick something in the PG or PG-13 realm to not offend more sensitive staff members.
  8. Financial Empowerment: Offer a financial education program such as those available through Dave Ramsey to help your employees overcome financial stress and achieve better money management.
  9. Musical Performance: Hire a barbershop quartet, local marching band or other musical ensemble to perform for your employees.
  10. Career Aspirations: Ask each employee to write down their career aspirations, and then bring them up during your annual performance reviews. This demonstrates your interest in their inner lives, and it identifies people who really care about the company.
  11. Coffee Cart: Hire a barista to set up a coffee cart onsite and serve free lattes, mochas and Italian sodas all day.
  12. Time Off: Consider giving your employees an extra day or half-day off (it doesn’t have to coincide with Employee Appreciation Day).

Here’s wishing you a fabulous day with your employees this Friday. For more HR best practices, Affordable Care Act and COBRA administration information and advice, subscribe to our COBRA blog in the top right corner of this screen. 

COBRA CONUNDRUMS – How Do New FSA Rules Apply in COBRA Scenarios?


COBRA CONUNDRUMS reprinted from the January, 2014 issue of Health Insurance Underwriter Magazine featuring our very own Robert Meyers.

On October 31, the IRS announced a loosening of the longstanding flexible spending account (FSA) use-it-or-lose-it rule. Since flexible spending accounts fall under COBRA, the next obvious question is … how will this change impact COBRA administration? As of this writing, there is no official guidance but we’ll attempt to unravel the “what ifs” below.

The old FSA rule

Participating employees had to use up all of their FSA funds on eligible plan expenses by the end of the year or the funds would be forfeited. Plan sponsors had the option of allowing up to a two and a half month grace period, which allowed employees a little more time to exhaust their FSA accounts.

The new FSA rule

Plan sponsors can now choose from two options: They can either keep their grace period with the use-it-or-lose-it rule intact, or they can eliminate the grace period and allow employees to roll over up to $500 of unused funds from the previous plan year.

COBRA implications under the old rule

  • COBRA-qualified employers (20+ employees) who offered a medical flexible spending account were required to offer COBRA only to those with underspent FSA accounts. They did not have to offer COBRA to those who had already used up FSA funds.
  • If Limited COBRA applied, the FSA portion of COBRA could be terminated at the end of the plan year in which the COBRA-qualification occurred.
  • Terminated employees were allowed to make after-tax contributions to their accounts once the employer’s paychecks stopped.
  • Employers were allowed to charge COBRA participants a small administrative fee.
  • Most employees who terminated in the middle of a plan year, and had not yet used up their FSA funds, elected to continue the FSA under COBRA. They would lose their funds upon termination if they did not elect COBRA.

How do you know if your plan qualifies for Limited COBRA?

Generally, if the Medical FSA is funded entirely by Employee Salary Reduction and the eligibility to participate in the FSA matches or exceeds the eligibility rules for the Group Health Insurance, then the plan can offer limited COBRA to its Medical FSA participants. If the plan doesn't meet the requirements for Limited COBRA, full COBRA must be offered and administered just like any other qualifying group health plan. Because the COBRA rules are so complex, remember to check with your legal counsel.

The “what ifs” of new rule COBRA application 

  • If the plan is eligible only for Limited COBRA (through end of current year and not eligible to renew the benefit for the subsequent plan year), the rollover option will likely have no impact.  Example:  Employee is a participant in calendar year 2013 FSA plan.  Employee terminates on 6/30/13.  Health FSA qualifies for Limited COBRA obligation (HIPAA excepted benefit).  Employee’s contributions exceed reimbursements for 1/1/13 – 6/30/13, so Employee is offered Limited COBRA and elects it.  Her FSA participation will terminate 12/31/13 (even if there is an applicable claims run out period), and she would not benefit from the rollover option since she would not be eligible to participate as of 1/1/14.
  • If the plan is not eligible for Limited COBRA, in the scenario above, the rollover would most likely apply. In that case, the participant could elect to continue FSA plan participation beyond 12/31/13 until COBRA eligibility expires. There is no current guidance on point, but I think that our assumption should be that for general (non-Limited) COBRA scenarios, the COBRA FSA participants will be treated like regular non-COBRA FSA participants and gain the benefit of the rollover. 
  • If an employee gets terminated after behaving obnoxiously at the company Christmas party and is therefore terminated on Friday, Dec. 27 with $500 left in his FSA and the plan year ends Dec. 31, the employer requirements still come down to whether the plan is eligible for Limited COBRA. The default for a Limited COBRA scenario is that the employee would be eligible only for the current year and would not be eligible to participate for 2014. If the employee had previously made an election for 2014, the employer could potentially discard it and not allow him to participate since the termination was prior to 1/1/14.

New rule recap 

  • The rollover provision is not a one-time event for 2014, and it may be implemented for the current plan year or for a future plan year.
  • The rollover allowance does not affect the maximum amount of employee contributions (currently $2,500).
  • The rollover provision is an alternative to the current 2.5 month grace period option for the Health FSA. Plans that are amended to incorporate the rollover will not be able to have the grace period. $500 is the maximum rollover amount. A plan may elect to use a lower rollover maximum (or no rollover at all), but the rollover amount may not exceed $500.

Every new rule triggers new questions and new procedures. Hopefully, you now have a bit more clarity regarding this FSA COBRA Conundrum.

Affordable Care Act Update


Affordable-Care-Act-UpdateHere’s another insightful Affordable Care Act update from our friend Jason M. Cogdill, Corporate Counsel & Benefits Attorney at ProBenefits, Inc.

Marketplace Update

On January 13, 2014, the Department of Health and Human Services released a report on the Health Insurance Marketplace covering the first three months of open enrollment, October 1 through December 28, 2013. 

Key statistics include: 

  • Through December, 2.15 million enrolled in either the federal Marketplace (1.2 million) or state exchanges (950k). That figure is now around 3 million.
  • Of 7.7 million applications through December, 5.1 million were eligible for an exchange plan (rather than Medicaid or Medicare). 53% of applicants were eligible for subsidy.
  • 80% of enrollees were subsidy eligible.
  • 33% of enrollees were ages 55-64.
  • 60% of enrollees chose Silver plan.  20% chose Bronze plan. 1% enrolled in catastrophic plans.

How Can Employers Reimburse Individual Health Premiums?

The short answer is that an employer can pay or reimburse individual or Marketplace premiums, but the payment or reimbursement must be done on a taxable basis. The opportunity to do it on a tax-free basis – whether directly, through an HRA, or through Section 125 – was effectively eliminated by joint IRS and DOL guidance issued in September. 

I am aware that there is a (loud) voice in the market that says differently. However, I do not agree with that convenient interpretation, and that view is too aggressive and risky for employers to adopt. Any employer that pays or reimburses individual or Marketplace coverage in 2014 and does not reflect the payments as taxable income will be accepting (knowingly or unknowingly) significant risk under the ACA. In addition to my own work on the subject, I have discussed the topic at length with other attorneys and have read 30+ articles published by law firms. All have reached the same conclusion. There appears to be a clear mandate from the agencies in charge, and my strong recommendation is that employers follow that guidance.

Do you have comments about employer reimbursement? Share with them with us below. Also, make sure to subscribe to the COBRA blog at the top right corner of this screen.

Finally … Long Awaited Employer Mandate Guidance


Employer-MandateHere’s another great update from our friend Jason M. Cogdill, Corporate Counsel & Benefits Attorney at ProBenefits, Inc.

On February 10, the IRS released the long-awaited final guidance on the employer mandate.  The guidance (227 pages in length) largely confirms the 12/27/12 proposed guidance on the mandate, but there are significant additions and transition rules. 

For a short summary of key details, attached is the Treasury “Fact Sheet” on the guidance with significant new items highlighted.  If you would like further details right away, the IRS published an extensive Q&A on its website.


  • While the mandate will take effect in 2015 as scheduled, there is a new exemption for 2015 for employers with less than 100 full-time employees,including full-time equivalents.  This will allow a full year of delay (until 2016) for any employer that can certify that it is 50-99 during 2014.  (Employers with 1-49 will continue to be fully exempt going forward.) 
    • Employers subject to the mandate in 2015 (100+ employers) will be required to offer coverage to at least 70% of full-time employees (rather than 95%) in order to avoid the A penalty (“sledgehammer”).  This will help many large employers stage in coverage for employees not currently offered coverage.
    • The maximum penalty for a 100+ employer in 2015 will be the number of full-time employees minus 80 (rather than minus 30).
    • Many 100+ employers with non-calendar year plans will be able to comply as of the 2015 renewal date rather than 1/1/15.  The transition rule in the final guidance is broader than the prior rule on this point.
  • In order to determine whether the mandate applies in 2015, the IRS is allowing employers to use any consecutive 6-month period in 2014 (rather than the full calendar year).  
  • Employers with 100 or more full-time employees plus equivalents will have to comply with the mandate in 2015 as scheduled.  However, there are at least 3 transition rules that will help these employers.  These include:
  • The IRS clarified and simplified certain rules regarding seasonal employees (new, broader 6-month rule applies), teachers and educational employees (including adjunct faculty), and governmental and nonprofit volunteer employees.  Otherwise, the measurement period option for employers to determine eligible status (30-hour rule) remains in effect.

We will continue to share Jason’s updates in an effort to keep you on the front-edge of the Affordable Care Act rollout in the coming weeks and months. If you haven’t already done so, subscribe to our blog at the top of this screen.

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