This can be a frantic time in the world of mid-size employers if they have put off thinking about ACA compliance. Employers with 50-99 employees may qualify for relief from the Shared Responsibility Payments for the 2015 and possibly into the 2016 benefit plan year if their benefits run on a non-calendar year. However there are strict eligibility requirements for the employer to meet. The criteria are:
Size of the group: The employer must employ on average at least 50 full-time employees (including full-time equivalents) but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014. Remember, groups of under 50 employees are not required to offer benefits.
Maintaining workforce hours of service: During the period beginning on Feb. 9, 2014 and ending on Dec. 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. If the employer has a bona fide business reason for workforce reductions, that may be considered. There are many food services and retail outlets that purposely reduced employee hours to less than 30 to attempt to avoid the payment. This would likely disqualify them from transition relief.
By the way, it is said that the reason for the 2/9/2014 start date is that transition relief was made public on 2/10/2014 and regulators wanted to prevent employers from making changes to be eligible after the new rules came out.
No material change to Previously Offered Health Coverage. During the period 2/9/2014 to 12/31/2015 the employer must not have eliminated or materially reduced the health coverage if any that was offered as of 2/9/2014.
An employer will not be treated as eliminating or materially reducing health coverage if (i) it continues to offer each employee who is eligible for coverage an employer contribution toward the cost of employee-only coverage that either (A) is at least 95 percent of the dollar amount of the contribution toward such coverage that the employer was offering on Feb. 9, 2014*, or (B) is at least the same percentage of the cost of coverage that the employer was offering to contribute toward coverage on Feb. 9, 2014*; (ii) in the event of a change in benefits under the employee-only coverage offered, that coverage provides minimum value after the change; and (iii) it does not alter the terms of its group health plans to narrow or reduce the class or classes of employees (or the employees’ dependents) to whom coverage under those plans was offered on Feb. 9, 2014*.
No Change in Plan year. It is not available for an employer that modifies the plan year of its plan after February 9, 2014, to begin on a later calendar date (for example, changing the start date of the plan year from January 1 to December 1). This is problematic for all those plans that took advantage of the “early renewal” offer from the insurance companies last year. This was called “Grandmothering”.
This Grandmothering allowed plans to maintain plans that did not comply with all of the -ACA (Affordable Care Act) requirements. Often it allowed them to hold lower rates than those that came with ACA compliant plans.
This Transition relief does not exempt the employer from all the reporting. It will be something that needs to be understood when the employer completes from 1094C. By now, most employers should be familiar with this form and the information they need to collect to complete the form. Some of it will come from the payroll reports, but not coding for transition relief. More information can be found on the IRS website at: https://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act#Transition.
