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Lani Chung

Cassandra Kercher Crifasi

Fundamentals of Health Policy and Management

Employer Mandate Summary8 February 2014

Employer Mandate SummaryThe Employer Mandate is a provision of the 2015 heath care reform law which states thatemployers who have a total of 50 or more full-time employees (defined as an individual who

works an average of at least 30 hours per week every month) are required to offer affordable

health care coverage to their employees. Employers that have a minimum of one full-timeemployee who does not receive affordable health care coverage sponsored by the employer, but

is eligible for a premium tax credit that they end of using to purchase coverage in the health

insurance exchange will face a penalty. The penalty will vary depending on whether the

employer extends any health care coverage to full-time employees at all or whether the coverage

provided is not financially affordable by the employees. More specifically, affordable

coverage for low-income employees who have annual incomes between 100-

400% below the federal poverty line is defined as health care that does notexceed 9.5% of an employees household income. Therefore, the employer must

pay a minimum of 60% of the cost of an employees health insurance for the

health care coverage to be deemed affordable.

From the employers standpointwhich in this situation is the insurers

perspectivethe employer mandate might seem a hindrance to the economic

growth of their respective businesses. This is because the mandate tends to

discourage the hiring of employees since the provision states that any business

with 50 or more full-time employees hired under it must provide affordable

health care to its workers or face a penalty for failing to do so. Due to this rule,

employers might try to keep their employment rates under 50 full-time workersat a time in order to bypass the provision that requires the mandatory extension

of affordable health care coverage to its employees. In addition, due to the

rapidly rising cost of insurance premiums, many small businesses might not be

able to shoulder the costs that are required to provide affordable coverage to

their employees, particularly so because of the declining economy. Generally,

employers might not look upon the mandate in a favorable light because of all

the potential harm to their overall revenue and the extra costs that will have to

go into either providing the affordable coverage for their employees or opting to

pay the penalty associated with the new law.

For the employees who are receiving the health care provided by their

employers, there may be two different reactions to the employer mandate.

There may be a negative reaction among consumers of the employer coverage if

employers decide to cut hours and jobs in order to stay under the 50 full-time

employee limit. If this happens, then employees will end up making smaller

salaries or get laid off all together. However, the positive aspect of the

employer mandate is that many employees who may not be able to afford private

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insurance will either be able to get coverage through their employers, or receive

government subsidies that will help to offset the cost of health insurance. It is

therefore fair to say that the points of view in regards to the employer mandate

may vary for the employees who are consumers of the affordable coverage as it

can either bring benefit or harm based on the decisions of their employers.

1. While the perspectives of the insurers and the consumers might berelatively clear in this situation, how do you think hospitals might react to

the new provision?

2. How can lay-offs/pay cuts be avoided while maintaining employer-sponsored insurance?

Works Cited

"Employer Mandate." U.S. Chamber of Commerce. 2014 The U.S. Chamber of

Commerce, n.d. Web. 07 Feb. 2014. .

"Health Policy Briefs: Employer Mandate." Health Affairs. Project HOPE, 15 Jan.

2010. Web. 09 Feb. 2014.

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