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Small Business Employee Benefits and HR Blog

Transition Relief for 2015

2015With 2015 approaching, the Affordable Care Act (ACA) and its employer shared responsibility provision is an important issue on the mind of many business owners. Due to delays of the provision, many small business owners feel confused about how the requirement will impact their business. In 2015, there is transition relief available to some employers. Here is an overview of the transition relief available for employers.

Background on the Employer Shared Responsibility Provision

The employer shared responsibility provision, also called ESR or the employer mandate, is the requirement for applicable large employers to either offer health insurance to employees, or pay a fee if an employee buys subsidized health insurance through the Marketplace.

Employers with more than 50 full-time equivalent employees are subject to the ESR. 2015 is a "phase-in" year for the employer mandate, as there is transition relief available for some employers with 50 to 99 full time employees.

Transition Relief for the Employer Shared Responsibility Provision in 2015

No employer shared responsibility payment under section 4890H (a) or (b) will apply during 2015 to employers who meet the following three conditions:

1. Limited Workforce Size

The employer has between 50 and 99 full-time equivalent employees on business days during 2014. The number of FTE employees is determined in accordance with the otherwise applicable rules in the final regulations for determining status as an applicable large employer.

2. Maintenance of Workforce and Aggregate Hours of Service

The employer may not reduce the size of its workforce or the overall hours of service for their employees during the period of February 9, 2014 to December 31, 2014 in order to qualify for transition relief.

**An employer that reduces workforce size or overall hours of service for bona fide business reasons is still eligible for transition relief.

3. Maintenance of Previously Offered Health Coverage

Employers may not eliminate or materially reduce health coverage offered as of February 9, 2014 during the period of February 9, 2014 to December 31, 2015.

**For employers with non-calendar year plans, this ends on the last day of the 2015 plan year.

An employer will not be treated as eliminating or materially reducing health coverage if the employer continues to offer each eligible employee an employer contribution toward the cost of employee-only coverage. The coverage must be either:

  • 95 percent of the dollar amount of the contribution toward such coverage that the employee was offering on February 9, 2014

    OR

  • At least the same percentage of the cost of coverage that the employer was offering to contribute toward coverage on February 9, 2014

In addition, the employer will not be treated as eliminating or materially reducing coverage in the event of a change in benefits under the employee-only coverage offered IF:

  • The new coverage provides minimum value after the change

    AND

  • The change in benefits does not alter the terms of its group health plans to narrow or reduce the class or classes of employees (or dependents of employees) to whom coverage was offered on February 9, 2014

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