Individual Penalty Transition Relief for Those Eligible to Enroll in Employer-Sponsored Coverage with a Plan Year That Begins in 2013 and ends in 2014
Because many employer-sponsored plans have non-calendar plan years, there have been questions regarding how to make plan decisions that effect businesses with employees and/or dependents who waived employer-sponsored coverage but would need to have minimum essential coverage beginning January 1, 2014 in order to avoid the Individual Shared Responsibility Payment (i.e. individual penalty). IRS Notice 2013-42, issued Wednesday 6/26/2013, addresses these questions and provides an employee, or an individual with a relationship to the employee, who is eligible to enroll in a non-calendar year employer-sponsored plan with a plan year beginning in 2013 and ending in 2014 will not be liable for the individual penalty until the end of the 2013-2014 plan year. Thus, employees and dependents that choose to wait until the 2014-2015 plan year to enroll in coverage will not be subject to the individual penalty for the months in 2014 that are part of the 2013-2014 plan year.
