Affordable Care Act Final Regulations: Part I Overview

Posted on March 07, 2014

Healthcare Professionals

On February 12, 2014, the Internal Revenue Service issued final regulations with respect to the Affordable Care Act (ACA). The regulations are effective for periods after December 31, 2014, but may be relied on at the present time.

This overview will provide a summary of the regulations and subsequent articles will address specifics.

Transitional Relief

Employers with Between 50 and 100 Employees

The employer responsibility provision will generally apply to employers with one hundred (100) or more full-time employees (including full-time equivalents) starting in 2015 and employers with fifty (50) or more full-time employees (including full-time equivalents) starting in 2016.

Offering Coverage to 70% vs. 90%

To avoid a payment for failing to offer health coverage, employers need to offer coverage to seventy (70%) percent of their full-time employees in 2015 and ninety-five (95%) percent in 2016 and beyond. This helps employers that, for example, may offer coverage to employees with thirty-five (35) or more hours per week, but not yet to those employees who work thirty (30) to thirty-four (34) hours per week.

Various Employee Categories


Hours contributed by bona fide volunteers for a government or tax-exempt entity, such as volunteer firefighters and emergency responders, will not cause them to be considered full-time employees.

Educational Employees

Teachers and other educational employees will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.

Seasonal Employees

Those in positions for which the customary annual employment is six (6) months or less generally will not be considered full-time employees.

Student Work-Study Programs

Service performed by students under federal or state-sponsored work-study programs will not be counted in determining whether they are full-time employees.

Adjunct Faculty

As a general rule and pending further guidance, employers of adjunct faculty are to use a method of crediting hours of service for those employees that is reasonable in the circumstances and consistent with the employer responsibility provisions. However, to accommodate comment requests for predictability and ease of administration, the final regulations allow crediting an adjunct faculty member with two and one-fourth (2 ¼) hours of service per week for each hour of teaching or classroom time as a reasonable method for this purpose.

Provisions to Assist Businesses to Comply in 2015

Full-Time Employee Status Determinations

The final rules allow employers to use an optional look-back measurement method to make it easier to determine whether employees with varying hours and seasonal employees are full-time.

Determination of 100 Full-Time or Full-Time Equivalent Employees

Employers can determine whether they had at least one hundred (100) full-time or full-time equivalent employees in the previous year by referencing a period of at least six (6) consecutive months, instead of a full year. This will help facilitate compliance for employers that are subject to the employer shared responsibility provision for the first time.

Non-Calendar Year Plans

Employers with plan years that do not start on January 1 will be able to begin compliance with employer responsibility at the start of their plan year in 2015, rather than on January 1, 2015. The regulations specify the conditions for this relief.

Dependent Coverage

The policy that employers offer coverage to their full-time employees’ dependents will not apply in 2015 to employers that are taking steps to arrange for such coverage to begin in 2016.

Measurement Period

On a one-time basis in 2014 preparing for 2015, plans may use a measurement period of six (6) months, even with respect to a stability period (the time during which a full time employee must be offered coverage) of up to twelve (12) months.

For more information about this or other topics please contact David M. Mosier or reach any of the Knox attorneys at 120 West Tenth Street, Erie, PA 16501 and by phone at 814-459-2800.

David M. Mosier is a Shareholder in the Business & Tax group.

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