The proposed regulations included many helpful transition rules. Although I hoped that the transition rules would be extended, I really didn’t think they would be. The good news is — I thought wrong. A package of limited transition rules that applied to 2014 under the proposed regulations has been extended to 2015, including:
- Special 6 month rule for determining status as a large employer: Rather than being required to use the full 12 months of 2014 to measure whether it has 50 full-time employees (or equivalents), an employer may determine its status as a large employer by using a period of at least six consecutive calendar months (as chosen by the employer) during 2014. For example, an employer might use January 1 to June 30, 2014 to determine its status as a large employer.
- Short measurement period for stability periods starting in 2015: For stability periods beginning in 2015, the final regulations provide a transition rule that allows a company to use a measurement period of less than 12 months, even if a 12-month measurement period would otherwise be required. The shorter measurement period must be at least six consecutive months, must begin no later than July 1, 2014, and must end no earlier than 90 days before the first day of the plan year beginning on or after January 1, 2015. For example, an employer with a calendar year plan may use a measurement period from April 15 through October 14, 2014 (six months), followed by an administrative period ending on December 31, 2014.
- Non-calendar year plans: Employers with plan years that do not start on January 1 will be able to begin compliance at the start of their plan years in 2015 rather than on January 1, 2015. Employers must meet very detailed requirements to qualify for this delay.
- Dependent coverage: The policy that employers offer coverage to their full-time employees’ dependents (i.e., natural and adopted children) will not apply in 2015 to employers that are taking steps to arrange for such coverage to begin in 2016. Employers must meet very detailed requirements to qualify for this delay.
For more information on these rules, please see my Checklist for Employers, the final regulations, and the IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.