In this video, we discuss the transition relief that’s available to groups with 50-99 full-time equivalent employees in 2015.
The transition relief for groups with fewer than 100 FTEs is described in section XV.D.6 of the Employer Mandate Final Rule:
XV. Transition Relief and Interim Guidance
D. Transition Guidance for 2015
6. 2015 Transition Relief for Applicable Large Employers With Fewer Than 100 Full-Time Employees (Including FTEs)
a. Eligibility Conditions for Transition Relief
An employer is eligible for the transition relief described in this section XV.D.6 if it satisfies the following conditions:
(1) Limited Workforce Size. The employer employs on average at least 50 full-time employees (including FTEs) but fewer than 100 full-time employees (including FTEs) on business days during 2014. For this purpose, the determination of the number of full-time employees (including FTEs) is made in accordance with the otherwise applicable rules for determining status as an applicable large employer. 
(2) Maintenance of Workforce and Aggregate Hours of Service. During the period beginning on February 9, 2014, and ending on December 31, 2014, the employer does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition set forth in paragraph (1) of this section XV.D.6. A reduction in workforce size or overall hours of service for bona fide business reasons will not be considered to have been made in order to satisfy the workforce size condition. For example, reductions of workforce size or overall hours of service because of business activity such as the sale of a division, changes in the economic marketplace in which the employer operates, terminations of employment for poor performance, or other similar changes unrelated to eligibility for the transition relief provided in this section XV.D.6 are for bona fide business reasons and will not affect eligibility for that transition relief.
(3) Maintenance of Previously Offered Health Coverage. Except as otherwise provided in this paragraph (3), during the coverage maintenance period the employer does not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014. For purposes of this paragraph (3), in no event will an employer be treated as eliminating or materially reducing health coverage if (i) it continues to offer each employee who is eligible for coverage during the coverage maintenance period an employer contribution toward the cost of employee-only coverage that either (A) is at least 95 percent of the dollar amount of the contribution toward such coverage that the employer was offering on February 9, 2014, or (B) is the same (or a higher) percentage of the cost of coverage that the employer was offering to contribute toward coverage on February 9, 2014; (ii) in the event there is a change in benefits under the employee-only coverage offered, that coverage provides minimum value after the change; and (iii) the employer does not alter the terms of its group health plans to narrow or reduce the class or classes of employees (or the employees’ dependents) to whom coverage under those plans was offered on February 9, 2014. For purposes of this paragraph, the term coverage maintenance period means (1) for an employer with a calendar year plan, the period beginning on February 9, 2014, and ending on December 31, 2015, and (2) for an employer with a non-calendar year plan, the period beginning on February 9, 2014, and ending on the last day of the plan year that begins in 2015.
For example, if on February 9, 2014, an employer was contributing $300 per month for coverage that costs $400 per month for employee-only coverage, and the employer continues to offer to contribute $300 per month after the cost of employee-only coverage increases to $425 per month for the plan year beginning on July 1, 2014, the increase in cost to the employee will not be treated for this purpose as an elimination or material reduction of health coverage offered.
(4) Certification of Eligibility for Transition Relief. The applicable large employer certifies on a prescribed form that it meets the eligibility requirements set forth in paragraphs (1) through (3). The forthcoming final regulations under section 6056 are expected to provide that an applicable large employer, or an applicable large employer member, that otherwise qualifies for the transition relief described in this section XV.D.6 will provide this certification as part of the transmittal form it is required to file with the IRS under the section 6056 regulations, in accordance with the instructions to that transmittal form. See section III of the preamble regarding section 6056.
b. Application of Transition Relief to Non-Calendar Year Plans
The transition relief described in this section XV.D.6 applies to all calendar months of 2015 plus any calendar months of 2016 that fall within the 2015 plan year. It is not available for an employer that modifies the plan year of its plan after February 9, 2014, to begin on a later calendar date (for example, changing the start date of the plan year from January 1 to December 1). Notwithstanding paragraph (a)(3) of this section XV.D.6, an employer with a non-calendar year plan meeting the coverage maintenance period requirements for 2015 may be eligible for the relief for 2015 even if the employer does not meet the coverage maintenance period requirements later (during the portion of the 2015 plan year falling in 2016).
c. Application of Transition Relief to New Employers
As described in section V.B of this preamble, an employer that was not in existence on any day of the previous calendar year may be an applicable large employer for the current calendar year if the employer is reasonably expected to employ an average of at least 50 full-time employees (including FTEs) on business days during the current calendar year and it actually employs an average of at least 50 full-time employees (including FTEs) on business days during the calendar year. For employers first coming into existence in 2015 that are applicable large employers under the standard in the preceding sentence, the relief described in this section XV.D.6 applies if (1) the employer reasonably expects to employ and actually employs fewer than 100 full-time employees (including FTEs) on business days during 2015, (2) the employer reasonably expects to meet and actually meets the maintenance standards described in paragraphs (2) and (3) above, as measured from the date the employer is first in existence, and (3) the employer certifies in the manner described in paragraph (4) above.
d. Coordination With Other Transition Relief
For periods on or after January 1, 2016 (or, if applicable, for any period after the last day of the 2015 plan year), the transition relief set forth in section XV.D.1 (non-calendar plan years), section XV.D.2 (shorter measurement periods permitted for stability period starting during 2015), section XV.D.4 (offer of coverage for January 2015), section XV.D.5 (coverage for dependents), and section XV.D.7 (limited 2015 section 4980H(a) transition relief) of the preamble will not be available. The transition relief listed in the prior sentence is available only with respect to 2015 or, if applicable, the 2015 plan year and does not apply to an applicable large employer that is eligible for the relief described in this section XV.D.6 because that eligible employer will first become subject to a potential assessable payment under section 4980H after 2015 or, if applicable, after the 2015 plan year and, accordingly, already will have had the benefit of an extra year to plan for and implement changes. However, an employer may use the rule set forth in section XV.D.3 of the preamble (shorter period in 2014 permitted for determining applicable large employer status for 2015) in determining applicable large employer status and full-time employee count for 2015 (but not for any subsequent year). 
The following example illustrates the transition relief described in this section XV.D.6 of the preamble:
(i) Facts. As of February 9, 2014, Employer A sponsors a group health plan with a calendar year plan year under which 40 of its full-time employees are offered coverage with an employer contribution of $300 per month for employee-only coverage. The offer of coverage is affordable with respect to some, but not all, of Employer A’s full-time employees. During the period from February 9, 2014, through December 31, 2014, two of Employer A’s employees voluntarily terminate employment and Employer A terminates three employees because of the non-renewal of a customer contract but does not otherwise reduce the size of its workforce or reduce any employee’s hours of service. Had those five employees continued in employment throughout 2014, the employer would have had an average of 100 full-time employees (including FTEs) on business days in 2014. However, as a result of the terminations, it had an average of only 97 full-time employees (including FTEs) for business days in 2014. During the coverage maintenance period, Employer A does not change the eligibility requirements for the group health plan (including not amending it to eliminate its existing health coverage for dependents) and continues to make an employer contribution of $300 per month toward the cost of employee-only coverage that provides minimum valve. Employer A certifies in a timely manner as to its eligibility for the transition relief.
(ii) Conclusion. Employer A will not be subject to an assessable payment under section 4980H(a) or (b) for 2015.