• Revenue Cycle Management
  • COVID-19
  • Reimbursement
  • Diabetes Awareness Month
  • Risk Management
  • Patient Retention
  • Staffing
  • Medical Economics® 100th Anniversary
  • Coding and documentation
  • Business of Endocrinology
  • Telehealth
  • Physicians Financial News
  • Cybersecurity
  • Cardiovascular Clinical Consult
  • Locum Tenens, brought to you by LocumLife®
  • Weight Management
  • Business of Women's Health
  • Practice Efficiency
  • Finance and Wealth
  • EHRs
  • Remote Patient Monitoring
  • Sponsored Webinars
  • Medical Technology
  • Billing and collections
  • Acute Pain Management
  • Exclusive Content
  • Value-based Care
  • Business of Pediatrics
  • Concierge Medicine 2.0 by Castle Connolly Private Health Partners
  • Practice Growth
  • Concierge Medicine
  • Business of Cardiology
  • Implementing the Topcon Ocular Telehealth Platform
  • Malpractice
  • Influenza
  • Sexual Health
  • Chronic Conditions
  • Technology
  • Legal and Policy
  • Money
  • Opinion
  • Vaccines
  • Practice Management
  • Patient Relations
  • Careers

Much Ado about Nothing? The Delay of the Employer Mandate


What exactly was so difficult and confusing about the now-delayed employer mandated "play or pay" penalty of the Affordable Care Act? And how does it affect the timeline of ACA implementation.

A lot has been written since the Treasury Department announcement on July 2, 2013 of the delay of the employer shared responsibility penalty under the Affordable Care Act (the Play or Pay penalty).

The delay was reportedly a surprise to both supporters and opponents of the health care reform law, which effectively changed the definition of full-time employment and created a major reporting headache for employers. The difficulty of determining who was eligible and who was not eligible for employer health coverage became more apparent with every effort to explain this component of the law.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark Mazur, a spokesperson at the U.S. Department of Treasury, said in a statement.

Proposed regulations on the mandate and reporting requirements are expected this summer and could be issued by any of these federal agencies: Internal Revenue Service, Department of Labor or the Department of Health and Human Service.

Play or pay penalty

Businesses with more than 50 full-time employees are required to provide affordable comprehensive health coverage to all eligible employees or face fines up to $2,000 per worker.

Sounds like fairly simple requirements to meet. However, the regulations are complex and take more than 200 pages to define full-time employment.

For example, what is full time? For what period do you begin counting the full-time employees and when do you stop? What if your business has a lot of part-time employees on and off throughout the year? What if your company allows flexible work schedules or use college students during the summer or holidays? How do you know what is affordable for your employees' households? What is meant by comprehensive? What if my business has a plan that was grandfathered under the law?

These questions are just a few of the hundreds of questions that a company must review to avoid the penalty.

The original effective date under the law was Jan. 1, 2014. The law included a one-year look-back period in determining the full-time employees. In other words, on Jan. 1, 2014, an employer would look back to 2013 to determine if the company is large or small, to determine which employees must be covered and whether the penalty applies or not.

Any employee who works more than 30 hours per week is eligible for coverage under their employer’s plan. Two part-time employees each working 15 hours per week is the equivalent of one full-time employee. They are counted in the 50 FTE to determine whether a company is large or small. The rules get more complicated if part-time employees work consecutive months with time off in between such as college students and seasonal workers.

Before July 2, many businesses had already made the decision not to hire new employees, or to further reduce the hours of existing part time employees and were counting the costs of paying the penalty versus providing the required coverage. In some cases, the company might need to restructure compensation plans or change employee work schedules to reduce actual hours worked.

The new effective date of the employer mandate is Jan. 1, 2015 — after the 2014 elections. The delay pushes these and other decisions out another year. It's anyone's guess whether employers will continue to hold their employee numbers down and postpone their hiring decisions yet another year. Meanwhile, other parts of the law are still scheduled for implementation.

Health care reform timeline

This is the year of 18 new taxes and 2014 is the year of mandates and exchanges. Still scheduled for Jan. 1, 2014, the individual mandate is under fire by some who say it's not fair for the employer mandate to be delayed without giving individuals an extension also. The individual mandate requires all eligible individuals to have coverage or pay a penalty.

The Health Insurance Marketplace (or Insurance Exchanges) is scheduled to open Oct. 1, 2013 to allow individuals time to select their insurance plans before Jan. 1. Both fully insured and self-funded health insurance plans are subject to the Patient-Centered Outcomes Research Institute fees ($1 per average number of covered lives in the plan) for plan years ending after Sept. 30, 2012; the first filing date and payment is due July 31, 2013. Other fees and taxes likely to be billed on the company's health insurance invoices include the health insurance sales tax, reinsurance fees, exchange user fees and risk adjustment fees, all beginning in 2014.

Beginning Oct. 1, 2013, employee notices are due from both large and small employers, with information on health insurance exchanges, premium tax credits and other health benefit plans offered by the employer.


Although the “play or pay” penalty has been extended, employers should plan now for any changes they need to make to the company's business structure, strategy and employee compensation and benefit plans. In some cases, more than a year will be needed for a smooth transition. Companies need to work with professionals who know health care reform to develop a Plan A but have a Plan B just in case.

Patti Perdue, CPA.CITP, is a principal in the accounting and consulting firm of Jackson Thornton (headquartered in Montgomery, Alabama) with offices in Alabama, Mississippi and Tennessee. Patti specializes in services to physician practices of all sizes. She can be contacted at or (334) 240-3657.

Jackson Thornton is a proud member of the National CPA Health Care Advisors Association (HCAA). HCAA is a nationwide network of CPA firms devoted to serving the health care industry. Members provide proactive solutions to the accounting needs of physicians and physician groups. For more information, contact HCAA at

Related Videos
Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice