On Monday, February 10th the Internal Revenue Service
(IRS) released long-awaited final regulations implementing the Employer Shared
Responsibility provision (the Free Rider Penalty or employer mandate) under
Health Care Reform. In addition to
clarifying a number of open issues, the final regulations offer certain transition relief to employers for the
2015 plan year but will require full compliance with the law in 2016.
General Rule and Effective Date
Under Internal Revenue Code (Code) Section 4980H, large employers
that do not offer health coverage to full-time employees and their dependent
children, or offer coverage that is “inadequate” or “unaffordable,” and have at
least one employee enroll in Exchange (Market place) coverage and qualify for a
federal premium tax credit or cost-sharing reduction, must pay a non-deductible
generally effective January 1, 2015, the final regulations provide transition
relief for non-calendar year plans in existence on December 27, 2012: for any employee for whom the employer offers
“adequate” and “affordable” coverage by the first day of the plan year
beginning in 2015, no penalty will be due prior to the beginning of the plan
year beginning in 2015. Note that an
employer is not eligible for this transition if it modified its plan year after
December 27, 2012 to begin at a later date.
The regulations include additional requirements an employer must satisfy
to be able to take advantage of this transition.
American Fidelity Administrative Services Can Help!
The final regulations provide welcome transition relief for
employers. The various transition rules
provide employers with additional time to refine their analyses, test their
strategies, and implement procedures that will be necessary in order to comply with
the rules on an ongoing basis.
American Fidelity Administrative Services provides a variety of
services designed to assist employers in understanding the changing law and
developing compliance strategies.
Learn more at AmericanFidelityConsulting.com or contact us at 877-302-5073.
Neither American Fidelity Assurance Company nor American Fidelity
Administrative Services provide tax or legal advice, we always recommend
working with your own legal counsel to discuss how your plans could be
Further, this is only a brief summary that reflects our current
understanding of select provisions of the law, often in the absence of
regulations. All of the interpretations contained herein are subject to change
as the appropriate agencies publish additional guidance.
Finally, any Federal tax information provided is not intended or
written, and cannot be used, for the purpose of (i) avoiding penalties under the
Internal Revenue Code, or (ii) promoting, marketing, or recommending to another
party any transaction or matter that is contained in our written work products.
Some products and services may be provided by third party
contractors or affiliated companies. Sales tax may apply to some services or
deliverables. AFAS consultants provide information for plan sponsors about
health and welfare benefit plans but do not provide guidance on specific
insurance products; AFAS can provide a referral to an insurance agency if you
would like assistance implementing or revising an insurance product.