The employer shared responsibility provisions begin in 2015, and these provisions are covered in Compliancedashboard reference material. The following are suggested steps for employers to begin preparing for these changes.
1. Determine if you’re a large employer.
- Large employers are those that employed 50 or more employees in the preceding calendar year. Full-time employees count as “1” and part-time employees must have their hours converted into “full-time equivalents” and added to the full-time employee count.
- Transition relief is available for employers with 50 – 99 employees, meaning that the shared responsibility provision do not take effect until the 2016 plan year.
- The Shared Responsibility provisions take effect for the 2015 plan year for employers with 100 or more employees.
Continue on if the above Shared Responsibility provisions apply to you.
2. Prepare to offer minimum essential health coverage (MEC).
- MEC must be offered to employees who work 30 hours or more and their dependents (but not spouses).
- Coverage must be provided to 95% (70% for 2015 plan year only) of employees who work 30 hours or more.
- Employers using the “look back” method should track hours of applicable employees.
- Determine what you will use as your measurement period and stability period (and administrative period if applicable.)
- Determine what you will use as your initial measurement period for new variable-hour, seasonal and part-time employees.
4. Ensure coverage is affordable.
- Coverage is affordable if the employee’s required contribution for self-only coverage does not exceed 9.56% (for 2015) of the employee’s household income. Three affordability safe harbors are available to meet this requirement.
5. Ensure coverage provides minimum value.
- Generally, the coverage provides minimum value if the employer sponsored plan is expected to cover, on average, at least 60% of health care costs (i.e., the plan has an actuarial value of at least 60%).
6. Update your Plan’s Rules and SPDs (if necessary) to reflect your decisions regarding offers of coverage and effective dates.
- Offers and effective dates should be coordinated to assure an offer will put coverage in place in time to avoid any potential penalties.
- Maintain adequate records to demonstrate that offers of coverage were made and accepted or rejected.
7. Understand the transition relief available to certain employers.
- The rules provide certain transition in relief in 2014 and 2015 for the shared responsibility provisions, including plans with plan years that are not calendar years.
The IRS has also provided a useful summary of the pay or play rules in a set of questions and answers.