Transition relief is available for employers with at least 50, but fewer than 100, full-time or full-time equivalent employees.
Transition relief means that employers that qualify are not subject to the reporting requirements under Internal Revenue Code Section 6056 and the employer shared responsibility provisions under IRC Section 4980H.
Employers that qualify under this new transition relief are required to provide coverage to only 70 percent, instead of 95 percent, of qualified employees in 2015.
To qualify for transition relief, four requirements must be met:
1. Limited work force size – The qualified employer must employ on average at least 50 full-time employees, including full-time equivalent employees, but fewer than 100 full-time employees, including full-time equivalent employees, on business days in 2015.
2. Maintenance of work force – The employer can make no reductions to the size of its work force or overall hours of service with the purpose of satisfying the work force size requirement. An employer may make changes to its work force or hours of service for bona fide business reasons only.
3. No coverage reduction – The employer may not eliminate or materially reduce the health insurance coverage presently offered to employees.
4. Certification – The employer must certify that it has satisfied the eligibility requirements.
The reporting requirements under IRC Section 6056 require employers to provide the following:
- The employer’s name, address and employer identification number
- The calendar year for which information is being reported
- A certification as to whether the employer offered to its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an employer-sponsored plan
- The number, address and Social Security/taxpayer identification number of all full-time employees
- The number of full-time employees eligible for coverage under the employer’s plan
- The employee’s share of the lowest cost monthly premium for self-only coverage providing minimum value offered to the full-time employee
The employer shared responsibility provisions under IRC Section 4980H require employers under certain circumstances to subsidize or share a part of the employees’ health insurance premium cost. But employers eligible for transition relief are exempt from this sharing responsibility for all of 2015.