The U.S. Treasury Department released the final rule implementing the Affordable Care Act’s (ACA) requirements for “large” employers (50+ full-time equivalent employees) under Internal Revenue Code §4980H for most large employers to be in compliance in 2015. The final rule follows Proposed Rulemaking over a year ago establishing several safe-harbors including allowing up to a 12-month “look back” safe-harbor for determining which variable-hour employees are determined full-time and eligible for employer health coverage. The final rule also provides additional transition relief and addresses some outstanding questions posed in the Proposed Rule. The final rule will be published in the February 12, 2014 Federal Register. Additional links to Treasury Department Fact Sheets, Q&As and full text of the rule can be found at the bottom of this message. We have provided a summary below based on a call that FMI participated in with the Treasury Department upon the release of the final rule.
The final rule reaffirms previous proposed rulemaking from Jan. 2, 2013 ACA guidance provisions, such as:
Allowing employers a safe-harbor “to use a look-back measurement period of up to 12 months to determine whether new variable hour employees or seasonal employees are full-time employees” averaging 30-hours per week followed by a “stabilization period” that maintains coverage for a length of time that matches the look-back period used.
Providing a safe-harbor under the ACA’s “affordability” requirements for employers who can demonstrate that self-only coverage offered to employees does not exceed 9.5 percent of an employee’s W-2 wages or rate of pay.
The final rule also provides additional transition relief and addresses some outstanding issues from the proposed rulemaking including:
“Large” employers with between 50-100 full-time equivalents will not be subject to enforcement under the ACA employer requirements until 2016 if the employer can certify that the size of its workforce was not reduced in order to avoid compliance with the ACA.
All large employers will be treated as in compliance with offering coverage to full-time employees if they offer coverage to 70% of their full-time employees in 2015, but will be required to offer coverage to 95% in 2016.
Large Employers do not need to offer health coverage to an employee’s dependents (children 26-years old or younger) through 2015, but will be required to do so in 2016.
In preparation for 2015, large employers will be allowed an abbreviated six-month “look-back” period that will have up to a 12-month “stabilization” period attached.
The same abbreviated look-back period will be allowed to measure the number of full-time equivalents to determine if an employer is considered “large” (50+ full-time equivalents) and subject to ACA’s employer mandates.
Non-calendar year plans will not be subject to compliance until the beginning of the plan year within 2015.
“Seasonal” employees are defined as those seasonal employees who work up to six-months in a year. Exceptions will be allowed in extraordinary circumstances.
Employer contributions to multiemployer plans that meet ACA requirements will be considered in compliance under an interim final rule.
FMI, Ernst & Young, and the E-FLEX Coalition will continue to review the details of these and other provisions within the final rule and plan to provide additional information later this week. The Treasury Department also indicated that final ACA rules on employer reporting are forthcoming but did not provide any specifics on timing. In the meantime, please see the links below and feel free to contact firstname.lastname@example.org if you have questions, comments or are seeking additional information.