Last month, the government released the much-anticipated final regulations for the employer shared responsibility provisions under the Patient Protection and Affordable Care Act ("PPACA") (see our e-alert here). The final regulations extended much of the transitional relief provided in the proposed regulations, including transitional relief for measurement periods beginning in 2014 that are used to determine which employees will be considered full-time beginning in 2015 (note: the final regulations provide that only applicable large employers with 100 or more full-time equivalent employees need to comply with the employer shared responsibility provisions beginning in 2015).
Applicable large employers may use a "look back" measurement period in 2014 to determine which employees are full-time employees during the 2015 stability period. Similar to the relief provided in the proposed regulations, the final regulations provide that solely for purposes of 12-month stability periods beginning in 2015, employers may adopt a transitional 2014 measurement period that is shorter than 12 months (the "Special 2014 Measurement Period"). The Special 2014 Measurement Period must:
- be at least six months long;
- begin no later than July 1, 2014; and
- end no earlier than 90 days before the first day of the plan year beginning on or after January 1, 2015 (90 days being the maximum permissible administrative period)
The advantage of using this Special 2014 Measurement Period is that an employer can temporarily use a shorter measurement period to determine full-time employees, and still take advantage of a 12 month stability period in 2015. Otherwise, under the general rules, if the employer wanted to use a 12 month stability period, its measurement period would have to be at least 12 months.
Employers with calendar year plans who want to take advantage of an optional administrative period in order to have time to perform administrative tasks before the beginning of the 2015 plan year (such as calculating employees' hours during the Special 2014 Measurement Period, determining eligibility for coverage, providing enrollment materials, conducting open enrollment, etc.) may have to begin their Special 2014 Measurement Period as soon as early April of this year. For example, if an employer with a calendar year plan wants to use a 90 day administrative period (the maximum permissible length of the administrative period), then its administrative period must begin no later than October 3 (i.e., 90 days prior to January 1). In this case, the Special 2014 Measurement Period must begin no later than April 3, 2014 and must end October 2, 2014.