Expert reminds employers that 2015 transition relief has expired for 2016 plan year

In 2015, employers were able to take advantage of several different types of transition relief from some of the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) requirements. However, at a recent webinar, What’s New With the ACA? Planning for 2016 and Beyond, sponsored by Ultimate Software, experts reminded employers that many of these transition rules expired in 2015. “It is important that you be aware of these and make adjustments,” noted Ann Carr Mackey, attorney at Ogletree Deakins.

Mid-size employers. Under the section 1513(a) ACA, employers with 50 or more full-time employees (FTEs) must offer FTEs minimum essential coverage (MEC) to avoid being assessed shared responsibility payments. Under transition relief offered by the IRS, employers with 50 to 99 employees were given until 2016 to begin offering MEC to substantially all of their FTEs. “Employers with 50 to 99 employees had to do the reporting for 2015, but they didn’t have to actually offer coverage,” said Mackey. “Now they do.”

Dependent coverage. In 2014 and 2015, the IRS provided transition relief for employers that either: did not provide dependent coverage; did not cover all dependents, or offered coverage to dependents that was not MEC. Employers were required to show they were taking steps to arrange for MEC for all dependents, but were not subject to a penalty. This transition relief expired at the end of 2015, and all ALEs must offer MEC to dependents as of the 2016 plan year, according to Mackey.

“Substantially all.” The ACA requires that ALEs offer MEC to at least 95 percent of their FTEs to avoid being assessed a penalty. In 2015, transition relief provided that employers only needed to make a qualifying offer of coverage to at least 70 percent of FTEs and their dependents. “We are reverting back to the statutory requirement, and employers have to offer coverage to 95 percent of FTEs in 2016, or they will be subject to the large penalty,” she said.

SOURCE: Ultimate Software webinar, March 3, 2016.

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