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February 14, 2014

RE: Affordable Care Act Update – Treasury "Employer Mandate" Rules Issued

Dear Mayor:

On February 12, Treasury issued its final employer mandate rules governing large employers (those with 50 or more employees) and the Affordable Care Act (ACA).  Known as the "employer shared responsibility" or "employer mandate" rules, these rules are generally known for requiring that employers with 50 or more full-time and/or full-time equivalent employees must provide full time employees and their dependents affordable health-care coverage that meets specified standards or face financial penalties. 

When the rules were released on February 12, what garnered the most attention was the rule that provides that employers with 50 to 99 fulltime workers have one more year to comply with the law.  They will not have to comply with the shared-responsibility provisions until January 1, 2016, after which they will be subject to any and all penalties and fees if they fail to comply with the ACA. 

The rule includes many other provisions, including those pertaining to seasonal employees and volunteer employees including first responders that are very important to municipalities and will go into effect on January 1, 2015.

Specifically, the rules, among other things:   

  • Clarify the meaning of the term governmental entity to include "the government of the United States, any State or political subdivision thereof, any Indian tribal government, or any agency or instrumentality of any of the foregoing."; 
  • Reiterate that a large employer for purposes of the ACA is one that with in the preceding calendar year employed an average of 50 or more fulltime and fulltime equivalent employees;
  • Grant employers a 12 month "look back" period in which to determine whether an employee is full or part time;
  • Clarify that the term full-time equivalent employee, or FTE, "means a combination of employees, each of whom individually is not treated as a full-time employee because he or she is not employed on average at least 30 hours of service per week with an employer, but whom, in combination, are counted as the equivalent of a full-time employee solely for purposes of determining whether the employer is an applicable large employer."; and
  • Provide that any employer who transitions from a small employer to an applicable large employer and provides qualified health care coverage to its employees by April 1 of the same calendar year in which they become a large employer will not be subject to any of the penalties for failing to meet the large employer mandate.

Seasonal Employees
Treasury also ruled that an employer is not considered to employ more than 50 full time employees if:  " (1) the employer's workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and (2) the employees in excess of 50 employed during such 120-day period are seasonal workers as defined by the Secretary of Labor." This should help municipalities with small full time workforces but larger seasonal workforces to remain exempt from the employer mandate, if those employees meet Labor's seasonal worker definition.

Volunteer First Responders
 Most notably, the final rule provides that the hours of bona fide volunteers do not count toward the "number of employees" calculation under the ACA.  This includes volunteer first responders who receive deferred compensation benefits, reimbursements or allowances for reasonable expenses incurred in the performance of services as volunteers, or nominal fees customarily paid in connection with the performance of services. 
This rule will help the many New Jersey municipalities served by volunteers who meet the Treasury's definition, and which were were concerned that the need to count their volunteers would cause them to become large employers subject to all of the rules of the ACA. 

So-called volunteers who receive more than nominal compensation -- expense reimbursements, small stipends, or length of service pension benefits – will not be considered bona fide volunteers and will have to be counted as employees for purposes of the ACA.  This means that municipalities where volunteers receive compensation that is more than nominal, even if it is less than what is paid to regular firefighters, will have to count their volunteers as employees for purposes of the ACA. 

This of course conforms to information contained in our January 14 letter ( ) about how [bona fide] volunteer first responders should be considered under the ACA, which was sent after Treasury's January 10, 2014, memo regarding fair treatment of volunteer firefighters. 

If you have any questions on this, contact Jon Moran at

Very truly yours,

William G. Dressel, Jr.
Executive Director



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