Released concurrently with Feb. 10’s changes to the employer mandate, the Affordable Care Act’s shared-responsibility regulations offer guidance to employers in two areas: non-assessment periods and transitional relief.
The non-assessment portion allows for specific periods of time when employers will not be held accountable for fines levied for failure to offer qualifying health insurance to a full-time employee. Additionally, employers entering their first year as an applicable large employer (ALE) were given details on a transition rule, giving them a specific time frame to comply fully with ACA mandates without being penalized.
Limited Non-Assessment Period Guidance
Per the rules associated with the shared-responsibility portion of the ACA, penalties will be imposed for each month that an employer fails to offer a full-time employee minimum essential coverage deemed affordable. However, during limited periods of non-assessment, those penalties will not apply, provided that the coverage eventually is offered within a given time frame. Please note that:
- The first three full calendar months of employment for a new worker expected to be full-time (under either the look-back measurement period or the monthly measurement period) will not be assessed, as long as coverage is supplied immediately following. This employee then would be eligible for coverage as a full-time employee.
- The first three months after an employee experiences a change to full-time status during the initial measurement period will not be assessed.
- Coverage must be offered on the first day of the first month following the end of the initial measurement period.
Transitional Relief for New Large Employers (Once)
The transitional rule applies only to employers crossing the 50-employee threshold into ALE status during their first year in business and did not offer coverage at any point in the previous calendar year. This remains true even if the company dips below 50 employees and regains ALE status at a later date.
Employers transitioning into ALE status will not be held accountable for compliance during the first three months of the calendar year.
For instance, if an employer offers coverage deemed affordable on or before April 1 of its first year under ALE status, it will not be penalized for the first three months for failing to offer coverage meeting the minimum-value requirements. However, if non-compliance carries over just one day to April 2, the employer will be held accountable for all three previous months, plus any further months not in compliance.
Obviously, there are a lot of moving parts within the federal government’s employer mandate, but organizations that are proactive in their approach to mitigate ACA compliance concerns will avoid potential costly penalties associated with non-compliance.
The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only. It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.
