Affordable Care Act:  Employer Mandate Update

The U.S. Department of the Treasury issued final rules governing the “employer mandate” provisions of the Affordable Care Act.  The rules apply to large employers (those with 50 or more employees, including cities) and require the employer to provide employee health coverage or face penalties. 

The new rules give employers with 50-99 employees one additional year to comply, extending enforcement until January 1, 2016.  Substantively, the rules include: (1) a definition of “governmental entity” that includes cities, (2) a 12-month “look back” period for employers to determine if an employee is full-time, and (3) a formula to determine whether an employer is a “large employer” (i.e., whether each employer had 50 or more full-time equivalent employees in the past calendar year). 

The rules provide that the hours of some seasonal employees and some bona fide volunteers don’t count towards the “large employer” determination.   Both of those terms, “seasonal employee” and “bona fide volunteer,” are defined in the new rules. 

The full text of the rules is available at:

Each city should consult with its legal counsel to determine whether it falls under the mandates of the Affordable Care Act and the employer health coverage mandate.  Please contact Laura Mueller, TML assistant general counsel, with questions at 512-231-7400 or  


TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.

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