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On February 12, 2014, the IRS published Final Regulations pertaining to the shared responsibility provisions of the Patient Protection and Affordable Care Act of 2010 (“PPACA”). Large employers are defined in PPACA as those with fifty or more full time equivalent employees. Under Code Section 4980H these employers are subject to an assessable payment if they fail to offer full time employees affordable coverage that provides minimum value and a full time employee enrolls in coverage for which he/she receives a premium tax credit. The Final Regulations offer a new piece of transitional guidance for some large employers; those with less than one hundred full time equivalent employees. If certain conditions are met, employers with full time equivalent numbers between fifty and one hundred will not be subject to an assessable payment under Code Section 4980H for the 2015 plan year if the employer:

  • has less than one hundred full time employees in 2014;
  • has not reduced its work force size or overall hours of service between 2/9/14 and 12/31/14;
  • maintained the health coverage that was in effect on 2/9/14 without material change; and
  • certified that the employer met such requirements on a prescribed IRS form (which will be released with upcoming Code Section 6056 regulations).

If these conditions are met, the employer becomes subject to PPACA pay or play penalties in the 2016 plan year.

The Final Regulations also offer additional guidance on a number of other PPACA related areas such as:

  • health coverage for an employee’s dependents is delayed to the 2016 plan year if the employer did not previously offer dependent coverage;
  • employers are relieved of providing coverage to 95% of their work force until 2016 if they do in fact cover 70% of their applicable work force during the 2015 plan year;
  • seasonal employees whose customary annual employment is six months or less generally will not be considered full time employees;
  • hours contributed by bona fide volunteers for a government or tax exempt entity (such as volunteer fire fighters) will not create full time employee status;
  • teachers and educational employees will not be treated as part time employees simply because their school is closed or operating on a limited schedule during the summer;
  • a safe harbor for calculating hours of service for adjunct faculty; and
  • certain previously issued PPACA transitional guidance applicable to the 2014 plan year has been extended to the 2015 plan year.