United States: The Affordable Care Act—Countdown To Compliance For Employers, Week 51: Speculating About Code Section 4980H Transitional Relief

Last Updated: January 20 2014
Article by Alden J. Bianchi

(Note: This is the first installment of a series of entries that Alden will be posting each week for the next 51 weeks as he counts down to the January 1st, 2015 ACA pay-or-play deadline). 

The Affordable Care Act is a massive law that affects a large swath of the U.S. economy. Providers, payers, carriers, individuals, and, yes, employers, are affected, each in different, and in many cases overlapping, ways. For "large" employers, i.e., those with 50 or more full-time and fulltime equivalent employees on average business days during the prior calendar year, the Act's "pay-or-play" rules (a/k/a "employer shared responsibility") are of paramount interest. Though originally slated to take effect January 1, 2014, the pay-or-play rules were postponed for one year, to January 1, 2015 (IRS Notice 2013-45). 2014 will be a critically important year as employers prepare to compliance in 2015. The regulators—principally the IRS, the Department of Labor and the Department of Health and Human Services—must issues the necessary regulations and other guidance necessary to implement the particulars not only of the pay-or-play rules but other provisions of the law that impact the employer- and union-sponsored group health plans.

Proposed regulations issued at the end of 2012 and published in the Federal Register on January 2, 2013 set out a "pay-or-play" framework. (For an explanation of these proposed regulations, please see our client advisory.) The preamble to the proposed regulations granted a series of transitional rules that were intended to assist employers as they endeavor to understand, navigate, and comply. But these transitional rule were all keyed to 2014. With one exception, it's not clear which rules will be extended and which will not. (The IRS as yet to say.) One item of transitional relief—related to the timing of compliance be fiscal year plans—is of particular importance. If this rule is not extended, the compliance will be required in the middle of the plan year commencing in 2014.

Set out below is a summary of the transitional rules together with our speculation on our part as to where the regulators may, should, or will land:
 

2014 Transition Relief

2015 Transition Relief

(1)

For purposed of determining an employer's status as an applicable large employer, employers could test any six consecutive months in 2013 as opposed to all of 2013
 
Unlikely that this rule will be extended. Employers have had ample time to understand this rule and prepare for its application.

(2)

When applying the "look-back measurement method" to determine an employee's status as "variable hour," an employer could factor into anticipated turnover and tenure.
 
Unlikely that this rule will be extended. The proposed regulations provided this transitional relief reluctantly based on a perceived misunderstanding of the rule in prior guidance. 

(3)

When applying the "look-back measurement method" to determine an employee's status as "variable hour," an employer that selected twelve month measurement and twelve month stability periods could shorten the 2013 measurement period to no less than six months, beginning July 1, 2013.
 
Unlikely that this rule will be extended. Employers have had ample time to understand this rule and prepare for its application.

(4)

Any employer failing to offer dependent coverage during 2014 could avoid the § 4980H(a) employer mandate by taking steps during its plan year that begins in 2014 toward offering of coverage to full-time employees and their dependents.
 
Unlikely that this rule will be extended. Employers have had ample time to understand this rule and prepare for its application.

(5)

Employers with fiscal years plans that previously offered coverage to a at least 33% of all employees (full-time and part-time) or actually covered 25% of all employees limit compliance to coverage months commencing with the 2014 fiscal year provided the coverage was unchanged from December 27, 2012. It is hoped that this relief or some form of it survives.  The plight of fiscal year plans has not changed with the passage of 12 months.  Compliance with the Act's employer shared responsibility rules will still start mid-year.  Failure to extend the rule would mean that an employer would either need to (i) comply sooner than the law requires or (ii) change their group health plan mid-year.
 

(6)

An employer could amend its fiscal year cafeteria plans to permit certain salary reduction elections to be made during 2013 so that employees could either (i) drop employer-provided coverage and instead obtain coverage through a public exchange, or (ii) elect to enroll in employer-provided coverage in order to avoid the individual mandate tax.
 
In recently issued guidance issued (IRS Notice 2013-71, Section VI.B; this rule was been extended.

(7)

An employer is treated as making an offer of coverage by virtue of contributing to a collectively bargained multiemployer plan, provided that the plan covers dependents, is affordable, and provides minimum value.
 
Somerelief is necessary for employers that contribute to collectively bargained multiemployer plans.  And while this rule is decried as "transitional" in nature, it more structural than transitional.  If the regulators are not prepared to announce a permanent rule any time soon, then this relied should be extended.
 

We expect that these relief transitional issues will be addressed in final regulations or other guidance, which we hope to see sooner rather than later.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Alden J. Bianchi
Similar Articles
Relevancy Powered by MondaqAI
Reinhart Boerner Van Deuren s.c.
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Reinhart Boerner Van Deuren s.c.
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions