The Obama administration has postponed for another year, until 2016, the Patient Protection and Affordable Care Act's (PPACA's) (P.L. 111-148) mandatory employer and insurer reporting requirements for some businesses. The second delay of the employer mandate applies to businesses with between 50 and 99 employees. Under the new rules, the imposition of any employer-shared responsibility penalty payments under Code Sec. 4980H is waived for 2015, allowing employers with between 50 to 99 workers to not provide health insurance to their employees or face a penalty until 2016. Employers would not be allowed to cut their workforces in order to fall within the transition relief. The White House still finds itself under fire from many employers who complain that the reporting rules are too complex to properly comply in time. The mandate was initially set to take effect in January 2014, but the White House announced its first delay in July 2013, giving large employers until January of 2015 to comply. Learn more at: http://www.cbiz.com/page.asp?pid=11159

1. February 12, 2014
IRS Issues Final Employer Shared Responsibility Regulations with New Transition Relief
The Obama administration has postponed for another year, until 2016, the Patient Protection and Affordable Care Act’s
(PPACA’s) (P.L. 111-148) mandatory employer and insurer reporting requirements for some businesses. The second
delay of the employer mandate applies to businesses with between 50 and 99 employees.
Under the new rules, the imposition of any employer-shared responsibility penalty payments under Code Sec. 4980H is
waived for 2015, allowing employers with between 50 to 99 workers to not provide health insurance to their employees or
face a penalty until 2016. Employers would not be allowed to cut their workforces in order to fall within the transition
relief.
The White House still finds itself under fire from many employers who complain that the reporting rules are too complex
to properly comply in time. The mandate was initially set to take effect in January 2014, but the White House announced
its first delay in July 2013, giving large employers until January of 2015 to comply.
Regulation Provisions
The final employer shared responsibility regulations (otherwise known as the employer mandate) provide significant
transition relief for both medium-sized employers (50-99 full-time employees) and larger employers (100 or more full-time
employees). The final regulations apply to periods after December 31, 2014. Employers may rely on them prior to that.
The IRS also issued a fact sheet highlighting some of the changes in the final regulations.
Major Transition Relief. The IRS, which has a lot of experience transitioning the application of complex sets of new rules
to employer plan sponsors, stepped forward with serious transition relief for employers. Under current rules (NPRM
REG-138006-12), employers with 50 or more full-time employees must offer minimum essential coverage to at least 95
percent of their full-time employees in 2015 to avoid assessed shared responsibility payments. Under the transition relief,
the shared responsibility rules will generally apply to larger firms with 100 or more full-time employees starting in 2015,
and employers with 50 to 99 full-time employees starting in 2016. To avoid a payment for failing to offer health insurance
coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016
and beyond.
2015 Transition Relief. In addition, the final regulations import the original transition rules that were in place when the
start date was set for 2014. A major feature of this transition relief is employers will not have to include dependent
coverage until 2016. To help employers subject to shared responsibility rules for the first time, employers can determine
whether they had at least 100 full-time or full-time equivalent employees in the previous year by reference to a period of
at least six consecutive months, instead of a full year. Employers with plan years that do not start on January 1 will be
able to begin compliance with employer responsibility at the start of their plan years in 2015 rather than on January 1,
2015. On a one-time basis, in 2014 preparing for 2015, plans may use a measurement period of six months even with
respect to a stability period (the time during which an employee with variable hours must be offered coverage) of up to 12
months.
Full Time Employees. The final regulations clarify the rules regarding which employees count as full-time. Volunteer
hours worked for a government or tax-exempt entity (such as volunteer firefighters) will not cause them to be considered
full-time employees. Teachers will not be treated as part-time for the year simply because their school is closed during
the summer. Employees whose positions customarily last for six months or less generally are not to be considered fulltime employees. Service performed by students under federal- or state-sponsored work-study programs is not be
counted in determining whether the students are full-time employees. Colleges seeking a bright line rule may credit
adjunct faculty with 2-1/4 hours of service per week for each hour of teaching or classroom time.
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2. Affordibility. The final rules adopt the safe harbors found in the proposed regulations for determining whether coverage
they offered is affordable to employees. The safe harbors allow employers to use the wages they pay, their employees’
hourly rates, or the federal poverty level in determining whether employer coverage is affordable.
Look-Back Period. The final rules adopt the approach found in the proposed regulations allowing employers to use an
optional look-back measurement method to make it easier to determine whether employees with varying hours and
seasonal employees are full-time. The final regulations clarify the application of this method and the alternative monthly
method of determining full-time status.
Information Reporting. The Treasury and the IRS will issue final regulations shortly that aim to substantially simplify and
streamline the employer reporting requirements.
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