ACA transition relief for 50-99 mid-size employers; what happens if plan year is changed during 2015?

[Flyboyjohn]

There are 6 requirements a 50-99 mid-size employer must meet in order to qualify for ACA transition relief, including not changing its plan year to begin at a later date after 2/9/14.

If the employer meets all 6 requirements penalty exposure is delayed a year until the end of the plan year that begins in 2015 (for example, a plan that renews 7/1/2015 would not be subject to penalty until 7/1/2016).

The question is what the consequences are if an employer meets the other 5 requirements but changes it's plan year in 2015 (say for example from a 7/1 renewal to a 10/1 renewal).

Some commentators contend that the transition relief is blown entirely and the employer is subject to penalty exposure retroactively as of 1/1/2015.

Others contend that the relief is still granted for 2015 but penalty exposure begins 1/1/2016 and only the remaining months in the 2015-2016 plan year are "lost".

Any opinions on this sticky issue welcome.

[Benefits 101]

This is purely guessing on anyone's part in my book... but if I were to bet on an outcome, I'd bet on #2. I'd advise and practice as if #1 were true.

[Peter Gulia]

If the expense saved by changing a plan year or an insurance-contract year makes dealing with the question worthwhile, consider asking the Internal Revenue Service for a letter ruling, perhaps seeking an expedited ruling.

[GBurns]

Considering the cost of getting a PLR, it does not seem worthwhile to take a chance.

I doubt that there is a viable reason not to make the change in a timely manner.