In this video, we discuss the section 4980H(a) transition relief available for companies with 100 or more full-time equivalent employees and answer the question “how do you calculate the across-the-board penalty in 2015?”
The transition relief for companies with 100 or more FTEs is described in section XV.D.7 of the Employer Mandate Final Rule:
XV. Transition Relief and Interim Guidance
D. Transition Guidance for 2015
7. Limited 2015 Section 4980H(a) Transition Relief
a. Offers of Coverage to at Least 70 Percent (Rather Than 95 Percent) of Full-Time Employees (and Their Dependents)
For purposes of section 4980H(a), the final regulations provide that an applicable large employer member is treated as offering coverage to its full-time employees (and their dependents) for a month if, for that month, it offers coverage to all but five percent or, if greater, five, of its full-time employees. As provided in § 54.4980H-4(a), an employee is treated as having been offered coverage only if the employer also offered coverage to that employee’s dependents. But see section XV.D.5 of this preamble for transition relief for a failure to offer coverage to dependents for the 2015 plan year.
As further transition relief, for each calendar month during 2015 and any calendar months during the 2015 plan year that fall in 2016, an applicable large employer member that offers coverage to at least 70 percent (or that fails to offer to no more than 30 percent) of its full-time employees (and, to the extent required under § 54.4980H-4(a) and the transition relief in section XV.D.5 of this preamble, their dependents) will not be subject to an assessable payment under section 4980H(a). Applicable large employer members qualifying for the transition relief set forth in this section XV.D.7.a continue to be subject to a potential assessable payment under section 4980H(b).
b. Calculation of Assessable Payments Under Section 4980H(a) for Applicable Large Employers With 100 or More Full-Time Employees (Including FTEs) for 2015
In general, an assessable payment under section 4980H(a) is equal to the number of all full-time employees (excluding 30 full-time employees) multiplied by one-twelfth of $2,000 for each calendar month. For purposes of the liability calculation under section 4980H(a), with respect to each calendar month, an applicable large employer member’s number of full-time employees is reduced by that member’s allocable share of 30. Accordingly, an applicable large employer with 50 full-time employees that is subject to an assessable payment under section 4980H(a) may be subject to an assessable payment based on 20 employees (that is, 50 minus 30) times one-twelfth of $2,000 for each calendar month. An applicable large employer member’s allocation is equal to 30 allocated ratably among all members of the applicable large employer on the basis of the number of full-time employees employed by each applicable large employer member during the calendar month. See § 54.4980H-4(e).
For 2015 plus any calendar months of 2016 that fall within the employer’s 2015 plan year, if an applicable large employer with 100 or more full-time employees (including FTEs) on business days during 2014 (or an applicable large employer member that is part of such an applicable large employer) is subject to an assessable payment under section 4980H(a), the assessable payment under section 4980H(a) with respect to the transition relief period will be calculated by reducing an applicable large employer member’s number of full-time employees by that member’s allocable share of 80 rather than 30. The rules set forth in § 54.4980H-4(e) apply with respect to allocation of the reduction by 80 full-time employees for the applicable large employer. For this transition relief period, the aggregate amount of assessable payment determined under section 4980H(b) for an applicable large employer member also may not exceed the potential assessable payment under section 4980H(a), including the reduction by the ratable portion of 80 as set forth in this paragraph, for that applicable large employer member. 
c. Application to Non-Calendar Year Plans
The transition relief described in this section XV.D.7 applies to all calendar months of 2015 plus any calendar months of 2016 that fall within the employer’s 2015 plan year, and is available for an employer only if it did not modify 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).
d. Coordination With Other Transition Relief
The relief described in this section XV.D.7 of the preamble applies in addition to the forms of transition relief described 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.3 (shorter period permitted in 2014 for determining applicable large employer status for 2015), section XV.D.4 (offer of coverage for January 2015), and section XV.D.5 (coverage for dependents) of this preamble.