ACA Final Regulations – Employer Shared Responsibility

The Treasury Department issued final guidance regarding the employer shared responsibility portion of the Affordable Care Act (Obamacare) on February 10, 2014. The law requires qualifying employers with at least 50 full time employees to offer health care insurance to employees and, as part of the requirement, the insurance needs to meet certain minimum value standards. If a company fails to meet these requirements, then they have to remit a tax payment known as the Employer Shared Responsibility Payment. Initially, the deadline to comply with these regulations was 2015, but the final guidance has granted an extension for qualifying companies which is outlined below. Additional clarification was also provided in a number of areas including employee classification. To keep clients, prospects and other updated on these changes, Belfint Lyons & Shuman has provided a summary of key changes below.

Compliance Changes – Extended Deadline

The final regulations made two significant changes to enforcement of employer shared responsibility clause. First, employers with less than 100 full time employees receive a one year delay which extends the deadline from 2015 to 2016. Companies with 100 or more full time employees are still required to comply by 2015, but one exception has been made. In 2015, these companies are only required to offer coverage to 70% of employees, reduced by 25% from the original rules. These changes were implemented to provide companies with additional time needed for the transition.

Extended 2014 Transitional Rules

In addition, there are transition rules which were to set to expire in 2014 that have been extended into 2015. These include:

  • First Time Compliance – Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the previous year by reference to a period of at least six consecutive months, instead of a full year.
  • Non-Calendar Year Plans – Employers with plan years that do not start on January 1 will be able to begin compliance with employer responsibility at the start of their plan years in 2015 rather than on January 1, 2015.
  • Dependent Coverage Effective Date – The coverage arranged for full time employee dependents will not apply as long as the company is taking steps to arrange for coverage to begin in 2016.
  • Measurement Period – On a one-time basis, in 2014 preparing for 2015, plans may use a measurement period of six months even with respect to a stability period – the time during which an employee with variable hours must be offered coverage – of up to 12 months.

Employee Category Clarification

There were several questions received about employee categories when the draft regulations were issued. As a result, clarification was provided about how specific types of employees are to be treated.

  • Volunteers – Hours contributed by bona fide volunteers for a government or tax-exempt entity should not be considered full-time employees.
  • Educational Professionals – Teachers and other educators are not to be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.
  • Seasonal Employees – Those in positions for which the customary annual employment is six months or less generally will not be considered full-time employees.
  • Student Work-Study Programs – Service performed by students under federal or state-sponsored work-study programs will not be counted in determining whether they are full-time employees.


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