Obamacare and Fiscal Year Plans

July 25, 2014

This alert is intended to address the general misconception that the Obamacare effective date for a fiscal year group health plan automatically will be deferred to the first day of the plan's 2015 fiscal year. There are transition rules which can defer the effective date for a fiscal year plan to the first day of its 2015 fiscal year, but the deferral is not automatic. There are several conditions to the deferral, two of which put a price tag on the deferral--the large employer on the first day of the plan's 2015 fiscal year must offer minimum essential coverage to the requisite percentage of its full time employees which, first, is "affordable" and, second, has "minimum value." Thus the level of coverage required for the deferral is greater than just the minimum essential coverage which a large employer is required to provide in order to "play" under the employer mandate's "pay" or "play" rules. For example, if a large employer with a fiscal year plan wants to defer the effective date until the first day of the plan's 2015 fiscal year, the large employer in order to satisfy these two conditions will need to forego the opportunity to pursue the so called "skinny" plan strategy which has recently gained some traction in some segments of the large employer community.

Please contact Jan Marsh if you want to discuss the foregoing in more detail.

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