Once employers know whether they’re an ALE (applicable large employer) and whether they’re part of a controlled group, they have baseline information to help determine just when compliance with the Employer Shared Responsibility (ESR) requirements is required.
Question 3: Have you qualified for transition relief?
Transition relief – or the lack of it – determines when an ALE must be in compliance with the Employer Shared Responsibility provisions of the ACA.
For employers with 50-99 full-time and full-time equivalent employees compliance may be as late as the plan renewal in 2016. Larger employers may have a delayed compliance date corresponding with the start of their 2015 plan year. Notice the use of the word “may” in each sentence. Transition relief is not a foregone conclusion for employers!
There is no short-cut to determining eligibility for transition relief. Employers should walk through the requirements step-by-step. And, it would be prudent for employers to document each step for their files in case questions arise at a later date.
Questions 29-39 of the “Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act” published by the IRS address transition relief specifics: http://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act#Transition.
Employers will be required to attest to whether they met the transition relief requirements if they certify they were eligible for it when completing line 22 of Form 1094-C.
Qualification for transition relief – or not – determines when an employer is subject to Section 4980 H penalties. Knowing the answer to this question provides a “date certain” for employer compliance with the “pay or play” provisions of the ACA. This information is critical to assessing benefit offering and employee eligibility options.
A special note of caution to employers with 50-99 full-time and full-time equivalent employees who are contemplating whether to shift their plan’s renewal date to retain their large group status for 2016 – you run the risk of losing transition relief! This would mean that the employer could have to be in compliance as early as January 1, 2015!