A non-calendar year plan that had coverage in place on Dec. 27, 2012:
- Will not owe the “inadequate coverage penalty” on any employee who was eligible for coverage on Dec. 27, 2012 (and on employees hired after that date, if they would have been eligible under the rules in effect on that date) until the start of the employer’s 2014 plan year
- Will not owe the “no offer penalty”if:
- At least one-quarter of all employees (whether full-time or not) were covered on any date chosen by the employer between Oct. 31, 2012, and Dec. 27, 2012; or
- Coverage was offered to at least one-third of all employees (whether full-time or not) during the open enrollment period prior to Dec. 27, 2012; and
- Affordable, minimum value coverage is offered to all eligible employees by the start of the 2014 plan year; and
- No plan that operates on a calendar-year basis was available to employees
Note: Employers with non-calendar year plans will need to report on offers and coverage for all of 2014, even though the play or pay penalty may not apply to them until the start of their 2014 plan year.
What is a Plan Year?
A plan year is the 12-month period used by the plan. The plan year may or may not be the same as the renewal date. If the plan files a form 5500, the plan year used for that filing generally will be the applicable plan year. If no 5500 is filed, the year that is defined as the plan year in the plan documents will be used. If the plan documents do not designate a plan year (or if there are no plan documents), then the plan year likely will be determined by the following rules, in this order:
The plan year is the deductible/limit year used under the plan.
• If the plan does not impose deductibles or limits on an annual basis, then the plan year is the policy year.
• If the plan does not impose deductibles or limits on an annual basis and either the plan is not insured or the insurance policy is not renewed on an annual basis, then the plan year is the employer’s taxable year.
• In any other case, the plan year is the calendar year.
