United Benefit Advisors Insight and Analysis Blog

The “Play or Pay” Package

By Linda Rowings, Chief Compliance Officer at United Benefit Advisors
  Dec 4, 2014 1:50:00 PM

The Play or Pay PackageThe employer-shared responsibility (“play or pay”) requirements do not apply to small employers and have been delayed until 2016 for most mid-sized employers. This raises the question – what exactly is included in the play or pay requirement, which a small employer may be able to ignore and that mid-size employer may not need to meet until later?

Employer-shared responsibility includes five basic requirements that must be met by a large employer to avoid penalties:

  1. The employer must offer minimum essential coverage to at least 95% of its full-time employees (under a transition rule, for 2015 the requirement is to offer minimum essential coverage to 70% of full-time employees).
  2. The employer must offer affordable, minimum value coverage to its full-time employees.
  3. The employer must consider an employee as full-time for health coverage purposes if the employee averages 30 or more hours work per week.
  4. The employer must offer minimum essential coverage to natural and adopted dependent children until the end of the month in which the child reaches age 26 (under a transition rule, this requirement is generally delayed to 2016).
  5. The employer must offer employees the opportunity at least once a year to elect or decline coverage under the group health plan (with an exception to the required opportunity to decline coverage for particularly generous coverage).

Employers that are small enough that the play or pay requirements do not apply, or have been delayed, still must meet many requirements under the Patient Protection and Affordable Care Act, such as the limit on waiting periods, but they need not meet the criteria of the play or pay package to avoid penalties.  Caution: fully insured plans must meet both state and federal requirements, so small and mid-size employers with insured plans should make sure that their plans meet state insurance law requirements. For example, some states have adopted the 30-hour threshold for eligibility, and some require that coverage be offered to spouses and children.

Note: for purposes of this blog piece, “small” means that the employer had fewer than 50 full-time or full-time equivalent employees in its controlled group during the prior calendar year. “Mid-size” means the employer had 50 to 99 full-time or full-time equivalent employees in its controlled group during the 2014 calendar year and has not materially reduced benefits, eligibility or contributions from the level in effect on February 9, 2014. Mid-size employers will need to provide reporting on available coverage for 2015, even though the actual employer shared responsibility requirements generally will not be effective for mid-size employers until 2016.

To help employers understand the pay or play provisions of the PPACA, download UBA’s white paper, “The Employer’s Guide to Play or Pay”. For help further help making pay or play decisions under PPACA, request UBA’s compliance and decision guides for small and large employers.

Topics: Linda Rowings, employers, Play or Pay, mid-sized