By Danielle Capilla
Chief Com­pli­ance Offi­cer at Unit­ed Ben­e­fit Advisors

MidSizeEmployersThe employ­er shared respon­si­bil­i­ty (i.e., “play or pay”) require­ments went into effect in 2015 for large employ­ers only (those with 100 or more full-time or full-time-equiv­a­lent employ­ees). Even though they gen­er­al­ly will not be liable for penal­ties until 2016, mid-size employ­ers (employ­ers with 50 to 99 full-time or full-time-equiv­a­lent employ­ees) will need to report on the cov­er­age they offered for 2015, so long as they meet the main­te­nance require­ments for tran­si­tion relief. To avoid penal­ties – begin­ning in 2015 for large employ­ers, and in 2016 for eli­gi­ble mid-size employ­ers – employ­ers must offer health ben­e­fits to employ­ees who work an aver­age of 30 or more hours per week, or 130 hours per month.

If a large employ­er has a non-cal­en­dar-year plan and can meet cer­tain tran­si­tion­al rules, it can delay offer­ing health ben­e­fits until the start date of its 2015 plan year. Sim­i­lar­ly, a mid-size employ­er with non-cal­en­dar-year plans that meets the same rules can delay offer­ing ben­e­fits until the start of its 2016 plan year. An unre­lat­ed set of tran­si­tion­al rules relat­ed to com­mu­ni­ty rat­ing under the Patient Pro­tec­tion and Afford­able Care Act (ACA) has cre­at­ed ques­tions regard­ing the total effect when a plan year changes its effec­tive dates.

Mid-size employ­er tran­si­tion relief (main­te­nance requirements)

For a mid-size employ­er to qual­i­fy for tran­si­tion­al relief (i.e., delay offer­ing health ben­e­fits until Jan­u­ary 2016), it must meet a set of main­te­nance require­ments. The main­te­nance require­ments are that the employ­er be able to cer­ti­fy (on IRS report­ing form 1094‑C) that dur­ing the peri­od begin­ning on Feb­ru­ary 9, 2014, and end­ing on the last day of the plan year that begins in 2015, the employer:

  • Has not reduced the size of its work­force or the over­all hours of ser­vice of its employ­ees so that it could qual­i­fy for this delay, and
  • Has not elim­i­nat­ed or mate­ri­al­ly reduced any cov­er­age it had in effect on Feb­ru­ary 9, 2014.

A mate­r­i­al reduc­tion means that:

  • The employ­er’s con­tri­bu­tion is either less than 95 per­cent of the dol­lar amount of its con­tri­bu­tion for sin­gle-only cov­er­age on Feb­ru­ary 9, 2014, or is a small­er per­cent­age than the employ­er was pay­ing on Feb­ru­ary 9, 2014;
  • A change was made to the ben­e­fits in place on Feb­ru­ary 9, 2014, that caused the plan to fall below min­i­mum val­ue; or
  • The class of employ­ees or depen­dents eli­gi­ble for cov­er­age on Feb­ru­ary 9, 2014, has been reduced.

Employ­ers with 50 to 99 employ­ees that are new­ly offer­ing cov­er­age to some employ­ees, or that only offer cov­er­age to a few employ­ees, are eli­gi­ble for the delayed effec­tive date as long as they don’t make changes that would vio­late the main­te­nance require­ments. Employ­ers with 50 to 99 employ­ees that have not pre­vi­ous­ly offered any cov­er­age have until Jan­u­ary 1, 2016, to offer cov­er­age with­out risk­ing penalties.

An employ­er with 50 to 99 employ­ees and a cal­en­dar year plan that does not meet the main­te­nance require­ments will be sub­ject to the play or pay require­ments, and penal­ties, as of Jan­u­ary 1, 2015.

For the non-cal­en­dar year tran­si­tion relief require­ments, tran­si­tion­al rules relat­ed to com­mu­ni­ty rat­ing, and what hap­pens when tran­si­tion relief poli­cies clash, request UBA’s ACA Advi­sor, “Mid-Size Employ­ers; Tran­si­tion Relief and Com­mu­ni­ty Rat­ing.”

Read More …