H&W: Expiration of Shared Responsibility Transition Relief

In its final rule on employer shared responsibility under the ACA, the IRS granted several temporary exceptions to the requirements of the rule in order to assist employers with the transition to their obligations under the rule.  In general, those exceptions expired at the beginning of 2016, or will expire sometime during the 2016 calendar year.  Employers should determine which, if any, of the transition rules they used and take action to comply or prepare to comply with the strict terms of the final rule going forward.

As a quick reminder, those transition rules include the following:

  • Normally, an employer determines whether it is a large employer for a given calendar based on the average number of persons employed on business days in the preceding calendar year. However, for the 2015 calendar year, an employer was able determine its status as an applicable large employer by reference to a period of at least six consecutive calendar months, as chosen by the employer, during the 2014 calendar year.  Beginning in 2016 and going forward, all employers must use the average for the entire preceding calendar year.
  • Certain employers were not subject to assessable payments based on the failure to offer coverage to dependents during the plan year beginning in 2015. That relief is no longer available for plan years beginning in 2016.
  • Large employers with fewer than 100 full-time employees were not subject to assessable payments during 2015 and, for non-calendar year plans, any part of the 2015 plan year that fell in 2016, provided that several other conditions had been satisfied. That relief is no longer available for plan years beginning in 2016.
  • Generally, a large employer is treated as offering coverage to its full-time employees (and their dependents) for a month if, for that month, it offers coverage to all but five percent or, if greater, five, of its full-time employees (and their dependents). For each calendar month during 2015 and any calendar months during the 2015 plan year that fall in 2016, a large employer member that offers coverage to at least 70 percent of its full-time employees (and, their dependents) will not be subject to an assessable payment under section 4980H(a).  Employers need to make sure that they are meeting the higher threshold beginning with the 2016 plan year.
  • Employers using a 12-month stability period were permitted to use shorter measurement periods for stability periods beginning in 2015 extending to the end of the 2015 plan year. Beginning with the 2016 plan year, employers will need to follow the standard rules regarding measurement and stability periods.

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