Employee Benefits Compliance, Employer Mandate, Large Employers

Does the Employer Mandate Apply as of January 1, 2015 even for Non-Calendar Year Large Employer Plans?

by Susan Grassli, J.D. & Lisa Klinger, J.D.

Unless future guidance indicates otherwise, it appears the effective date for the Employer Shared Responsibility provision is January 1, 2015 for both calendar year and non-calendar year plans.  Thus, all large employers planning to comply with the Employer Shared Responsibility provision should prepare now in order to be ready for the January 1, 2015 effective date.

Employers with variable hour and seasonal employees who plan to use the Look Back/Stability Period safe harbor method to track hours of such employees should already have started using this method.  For example, employers should start tracking hours as of December 1, 2013 if they selected a twelve month Standard Measurement Period (which will start January 1, 2015) and a one-month Standard Administrative Period (which will be December 1-31, 2014).

Background:

On July 2, 2013, the Obama Administration announced a one-year delay (to 2015) in the effective date of the ACA Large Employer Reporting Requirements and associated Employer Shared Responsibility provisions.

On July 9, 2013, the IRS issued guidance formalizing the postponed effective dates.  However, many unanswered questions remain, despite the 3-page IRS guidance (Notice 2013-45).  Additional guidance is expected, but to date none has been issued.

Unanswered Questions:

Under the ACA, the effective date of the Employer Shared Responsibility provision was January 1, 2014 for all plans.  However, the December 28, 2012 proposed regulations included a transitional rule that allowed certain (but not all) non-calendar year plans to delay the effective date from January 1, 2014 until the first day of their 2014 plan year.  To qualify for this transitional delayed effective date, an employer had to be able to answer “yes” to a series of three questions.  (For more information on this transitional rule, please see our February 2013 article entitled Employer Shared Responsibility: How the Delayed Effective Date Rules Apply To Non-Calendar Year Plans).

Because the transitional rule issued in December 2012 applied for only 2014, and because there was no mention in the July 2013 guidance allowing non-calendar year plans to start offering on the first day of their 2015 plan year instead of on January 1, 2015, there appears to be no transitional rule for 2015.

What this means:

Unless we hear otherwise in future guidance, the effective date for the Employer Shared Responsibility provision is January 1, 2015 for both calendar year and  non-calendar year plans.

All large employers planning to comply with the Employer Shared Responsibility provision should prepare now in order to be ready for the January 1, 2015 effective date.

Particularly, employers who plan to use the Look Back/Stability Period safe harbor method to track hours of employees with variable hours and seasonal schedules should have officially started using this method.  For example, employers who selected a twelve month Standard Measurement Period and a two month Standard Administrative Period, should have started officially measuring by November 1, 2013. Employers who selected a twelve month Standard Measurement Period and a one month Standard Administrative Period, should have started officially measuring by December 1, 2013.

For more information about the delayed effective date, please see our July 2013 articles entitled: Employer Shared Responsibility: Penalties and Reporting Requirements Delayed until 2015 and The Impact of the One-Year Delay of Employer Shared Responsibility