Tuesday Tax Tidbit: Short-term ACA Relief Now Available for Midsize and Large Employers

Recently released IRS final regulations for the Affordable Care Act’s (ACA’s) employer shared-responsibility provision provide some short-term relief for midsize and large employers.

Under the ACA, the shared-responsibility provision (commonly referred to as “play-or-pay”) applies to “large” employers — those with the equivalent of 50 or more full-time employees. Play-or-pay had been scheduled to go into effect in 2014 but last year the IRS pushed that out to 2015. Now, under the final regs, eligible midsize employers that otherwise would be considered large employers under the ACA won’t be subject to the provision until 2016. To qualify for the midsize-employer relief, an employer must:

• Employ on average fewer than 100 full-time employees or the equivalent during 2014,
• Maintain its workforce size and aggregate hours of service,
• Maintain the health care coverage it offered as of Feb. 9, 2014, and
• Certify that it meets these requirements.

The final regs also provide some relief for large employers that don’t qualify for the midsize-employer relief: In 2015, they can avoid the penalty for not offering minimum essential coverage by offering such coverage to at least 70% of their full-time employees, rather than the 95% originally scheduled. The 95% requirement will apply in 2016 and beyond.

The final regs also clarify certain aspects of the play-or-pay provision. Please contact us if you’d like more information on the final play-or-pay regs or other ACA provisions.