On February 10, 2014, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued final regulations implementing the employer responsibility provisions under the Affordable Care Act (ACA). Despite being previously delayed, the final regulations provide transition relief to employers with 50 or more employees, which, according to the administration, should ensure a gradual phase-in of the employer mandate.
Since the employer mandate does not apply to employers with fewer than 50 employees, small employers are not required to provide coverage or fill out any forms in 2015, or in any year, under the ACA. For employers with 50 or more full-time employees, the final regulations provide the following transition relief.
Large Employers (100 or more employees): The final regulations reduce the percentage of full-time employees that must be offered health coverage. To avoid paying a penalty, large employers must offer coverage to 70% of their full-time employees in 2015, and 95% in 2016 and beyond. Large employers that do not meet these standards will have to make employer responsibility payments beginning in 2015.
Medium Employers (50 to 99 employees): The employer responsibility provisions will not apply to employers with 50 to 99 full-time employees until 2016. However, to be eligible for this transition relief, employers must certify that they meet the following conditions:
- Limited Workforce Size. The employer must employ an average of at least 50 but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014. The number of full-time employees (including full-time equivalents) is determined in accordance with the otherwise applicable rules in the final regulations for determining status as an applicable large employer.
- Maintenance of Workforce and Aggregate Hours of Service. From February 9, 2014 to December 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief. However, an employer that reduces workforce size or overall hours of service for bona fide business reasons is still eligible for the relief.
- Maintenance of Previously Offered Health Coverage. From February 9, 2014 to December 31, 2015 (or, for employers with non-calendar-year plans, the last day of the 2015 plan year), the employer does not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014. An employer will generally not be treated as eliminating or materially reducing health coverage if: (i) the employer contributes at least 95 percent of the dollar amount or at least the same percentage of the cost of coverage that was offered on February 9, 2014; (ii) any changes in benefits to employee-only coverage continue to provide minimum value; and (iii) the employer does not narrow or reduce the classes of employees (or the employees’ dependents) to whom coverage under was offered on February 9, 2014.
Since the final regulations cover a number of different topics and are highly technical, employers looking to take advantage of the transition relief should consult with a licensed professional.
Though many welcome the transition relief provided in the final regulations, it doesn’t look like 2014 will bring stability and predictability to health care under the Affordable Care Act. At Setnor Byer Insurance & Risk, we are committed to guiding you through the changes coming in 2014. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.
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