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‘Pay or Play’ Requirements Delayed Until 2016 for Large Employers With Fewer Than 100 Full-Time Employees

Final Rules on Employer Shared Responsibility

Newly issued final rules provide guidance regarding the shared responsibility (“pay or play”) requirements under Health Care Reform. While employers with at least 50 full-time employees (including full-time equivalents or FTEs) are generally subject to the requirements, the final rules provide transition relief for certain large employers with respect to all of 2015 and, for non-calendar plan years that begin in 2015, for the portion of that 2015 plan year that falls in 2016.

An employer is generally eligible for this transition relief if it satisfies the following conditions:

•Limited Workforce Size. The employer employs on average at least 50 full-time employees (including full-time equivalents or FTEs), but fewer than 100 full-time employees (including FTEs) on business days during 2014.

•Maintenance of Workforce and Aggregate Hours of Service. During the period beginning on February 9, 2014, and ending on December 31, 2014, the employer does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition. (A reduction in workforce size or overall hours of service for bona fide business reasons will not be considered to have been made in order to satisfy the workforce size condition.)

•Maintenance of Previously Offered Health Coverage. Except as expressly permitted, during the “coverage maintenance period” the employer does not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014. “Coverage maintenance period” means:

  • For an employer with a calendar year plan, the period beginning on February 9, 2014, and ending on December 31, 2015, and
  • For an employer with a non-calendar year plan, the period beginning on February 9, 2014, and ending on the last day of the plan year that begins in 2015

•Certification of Eligibility for Transition Relief. The employer certifies on a prescribed form that it meets the eligibility requirements set forth above. Forthcoming final regulations related to employer information reporting are expected to provide that an employer subject to the requirements who qualifies for transition relief will provide this certification as part of the transmittal form it is required to file with the IRS.

Stay tuned for more information regarding the final rules.