Transition Relief for 2014


Employer Shared Responsibility Provisions

Notice 2013-45, issued on July 9, 2013, provided as transition relief that no Employer Shared Responsibility payment applies for 2014. The rules provide certain relief for employers as they transition to compliance with the shared responsibility rules.

Fiscal Year Plans

A fiscal year plan is a plan with a plan year that is not a calendar year.

If an employer maintains a fiscal year plan as of December 27, 2012, the relief applies with respect to its employees (whenever hired) who would be eligible for coverage, as of the first day of the first fiscal year of that plan that begins in 2014 (the 2014 plan year) under the eligibility terms of the plan as in effect on December 27, 2012. If such an employee is offered affordable, minimum value coverage no later than the first day of the 2014 plan year, no assessable payment will be due with respect to that employee for the period prior to the first day of the 2014 plan year.

In addition, a large employer is permitted, to amend one or more of its written cafeteria plans to permit either or both of the following changes in salary reduction elections:

  1. An employee who elected to salary reduce through the cafeteria plan for accident and health plan coverage with a fiscal plan year beginning in 2013 is allowed to prospectively revoke or change his or her election with respect to the accident and health plan once, during that plan year, without regard to whether the employee experienced a change in status; and
  2. An employee who failed to make a salary reduction election through his or her employer’s cafeteria plan for accident and health plan coverage with a fiscal plan year beginning in 2013 before the deadline for making elections for the cafeteria plan year beginning in 2013 is allowed to make a prospective salary reduction election for accident and health coverage on or after the first day of the 2013 plan year of the cafeteria plan, without regard to whether the employee experienced a change in status event.

The purpose of this relief is to allow employees to disenroll and purchase coverage through an Exchange or to enroll in employer-sponsored coverage to avoid the individual responsibility payment even though this would not otherwise be a status change event. Note that a cafeteria plan would have to be specifically amended to permit this. The amendment must be made no later that December 31, 2014 and be retroactive to the first day of the 2013 plan year for the cafeteria plan.

Measurement Periods

An employer that uses a look-back measurement period solely for purposes of stability periods beginning in 2014, may adopt a transition measurement period that is shorter than 12 months but that is no less than 6 months long and that begins no later than July 1, 2013 and ends no earlier than 90 days before the first day of the plan year beginning on or after January 1, 2014.

Multiemployer Plans

Multiemployer plans are collectively bargained plans to which two or more participating employers contribute. A large employer will not be treated as failing to offer the opportunity to enroll in minimum essential coverage to a full-time employee and will not be subject to a penalty with respect to a full-time employee if:

  1. The employer is required to make a contribution to a multiemployer plan with respect to the full-time employee pursuant to a collective bargaining agreement or an appropriate related participation agreement;
  2. Coverage under the multiemployer plan is offered to the full-time employee; and
  3. The coverage offered to the full-time employee is affordable and provides minimum value.

Large Employer Determination

For purposes of the large employer determination for the 2014 calendar, an employer has the option to determine its status as a large employer by reference to a period of at least six consecutive calendar months, as chosen by the employer, in the 2013 calendar year (rather than the entire 2013 calendar year). Thus, an employer may determine whether it is a large employer for 2014 by determining whether it employed an average of at least 50 full-time employees on business days during any consecutive six-month period in 2013.

Coverage For Dependents

Recall that whenever this material talks about coverage for employees, it’s really talking about coverage for employees and their dependents. Some employers may not currently offer dependent coverage. However, any employer that takes steps during its plan year that begins in 2014 toward satisfying the shared responsibility provisions relating to the offering of dependent will not be liable for any assessable payment solely on account of a failure to offer coverage to the dependents for that plan year.

Wellness Programs

Under the May 3, 2013 NPRM, for plan years beginning before 2015, an employer will not be subject to an assessment with respect to an employee who received a premium tax credit because the employer’s plan was not affordable or did not provide minimum value if the coverage offered to the employee would have been affordable or would have satisfied MV based on the total required employee premium and cost-sharing for that group health plan that would have applied to the employee if the employee had satisfied the requirements of any wellness program:

• Based on the terms of that program in effect on May 3, 2013;
• For which the employee would have been eligible on that date; and
• To the extent of the reward as of May 3, 2013, expressed as either a dollar amount or a fraction of the  total required employee contribution to the premium.

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