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Employer Shared Responsibility Changes In Measurement Periods or Methods Applicable to Employees

The Internal Revenue Service (IRS) recently issued proposed guidance to provide an approach to the application of the look-back measurement method when determining if an employee is full-time for the purposes of the employer mandate. These proposed methods are to be used when an employee transfers positions with differing measurement periods.


To whom does this apply?

This guidance applies to applicable large employers with 100 or more full-time equivalent employees (FTEs) who must comply with the employer mandate beginning with their first plan year in 2015, and who are using look-back measurement periods to determine their full-time employee population. As a reminder, employers with 50 to 99 FTEs will need to comply in 2016.


How does this apply?

The look-back measurement period is one of two ways for employers to determine their employees' full-time status. The guidance released addresses two scenarios that employers may face:

The employee transfers positions within the same employer; however, the measurement periods differ due to the position

An applicable large employer changes the measurement period for the next calendar year


What steps should employers take to comply?

If you are an employer who has had employees transfer positions within the year, or you have changed your measurement periods for the next calendar year, you should use the following guidance to determine your employees' full-time status:

If an employee is in a stability period and they were employed for a full measurement period at the time of their transfer, the employee retains his or her full-time status through the end of the stability period.

In the case of a new employee who, as of the date of their transfer, is in an administrative period (the period immediately following the initial measurement period), the employee's status as a full-time employee will apply through the end of that administrative period and subsequent stability period. The employee's full-time status in this case is based on hours of service in the initial measurement period under the first position.

If the employee is not in a stability period at the time of transfer, the employee's status would be determined by using the measurement period applicable to the second position, but would include hours of service for the first position when applying the measurement period.

As a reminder, employers must treat all similarly situated employees consistently.


When do employers need to comply?

The proposed guidance is effective immediately and may be relied on until further guidance is issued.


Whom can I contact with questions?

You can contact your client relationship manager with questions.


Compliance Quarterly is provided as an informational tool. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this publication and any attachments, Meritain Health is not exercising discretionary authority over the plan and is not assuming a plan fiduciary role, nor is Meritain Health providing legal advice.