In addition to formally adopting many of the proposed regulations that were provided back in January 2013 (e.g. the optional look-back measurement method), the final rules also provide several clarifications and amendments, including various transition relief provisions.

One particularly significant transition rule delays enforcement of the shared responsibility rules until 2016 for employers with fewer than 100 full-time equivalents (FTEs). To determine the number of full-time equivalents (FTEs), the employer must use the existing 4980(H) counting methodology, but can use 6 consecutive months of 2014 employment data, rather than the entire 2014 calendar year as normally required.

Transition rules and delays applicable to the 2015 plan year only include:

• No 4980(H) employer penalties for employers with fewer than 100 FTEs so long as there isn't a reduction in workforce or hours of service solely to avoid compliance or a material reduction in benefits offered;  
• No penalty 4980(H)(a) for employers with 100 FTEs or more so long as the employer offers coverage to at least 70% (formerly 95%) of all full-time employees;
• When calculating penalties under 4980(H)(a), a waiver of the penalty for the first 80 full-time employees (rather than 30);
• When calculating penalties under 4980(H)(b), penalty is capped at total potential penalty under 4980(H)(a) including the waiver of the first 80 full-time employees; and
• No penalty for plans that do not currently offer coverage to dependent children if the plan is taking steps during 2015 to do so in 2016.

Other transition relief previously provided in the proposed regulations for 2014 was extended and now applies for 2015:

• For those employers subject to the rules in 2015 (i.e. employers with 100 or more FTEs):
• Non-calendar plan years do not have to comply until the plan's 2015 renewal so long as certain criteria are met; and
• If using the optional look-back measurement method, the first standard measurement period to determine eligibility for 2015 may be shorter than 12 months but not less than 6 months and must begin no later than July 1, 2014.

   

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