Thursday, January 24, 2013

Employer Exchange Notification Delayed

The PPACA requirement that employers notify their employees of the existence of Exchanges has been delayed until late summer or early fall according to an FAQ just released by the Employee Benefit and Security Administration. The notice was originally required to be sent to employees by March 1, 2013.

Click here to view the FAQ in full.

Additional posts regarding the remainder of the FAQ will follow.

Wednesday, January 2, 2013

Guidance Eases Employer Compliance With PPACA Mandate

Employers will not face massive penalties mandated by the health care reform law if they do not offer coverage to all their full-time employees, according to newly proposed Internal Revenue Service regulations.


The massive $2,000-per-full-time-employee penalty will not apply so long as employers offer coverage to at least 95% of their full-time employees and their dependents up to age 26, the IRS said.Those eagerly awaited regulations, which were issued last week, end more than a year and a half of uncertainty involving a health care reform law provision of crucial importance to employers.

Read literally, the Patient Protection and Affordable Care Act imposes, effective in 2014, a penalty of up to $2,000 per full-time employee on employers with at least 50 employee even if just one full-time employee is not offered coverage, is eligible for a federal premium subsidy, and used the subsidy to buy coverage in a public health insurance exchange.That prospect alarmed employers. Without regulatory flexibility, there could be situations in which an employer could face the full force of the assessment even though it offered coverage to all, or virtually all, of its full-time employees.

One common situation, benefit experts say, involves employers that do not offer health care coverage to part-time workers working less than 30 hours a week. But in any given month, a part-time employee might work more than an average 30 hours per week. As experts interpret the law, if that employee received a premium subsidy to buy coverage in a state or federal exchange, the assessment would be based on the number of an employer's all full-time employees.

To read the full article on businessinsurance.com click here.



New Guidance Requires Employers to Cover Dependents or Face Penalties

In guidance released by the IRS on 12/28 it has been clarified that large employers are required to offer coverage to their employees and their dependent children up to age 26 or face a penalty. Many large employers had argued that based on some of the wording in the regulations that they should be required to offer coverage to their employees only.

The guidance states:

 The term dependents, as defined in these proposed regulations for purposesof section 4980H, does not include any individual other than children as described inthis paragraph of the preamble, including an employee’s spouse. Thus, an offer of coverage to an employee’s spouse is not required for purposes of section 4980H because section 4980H refers only to dependents (and not spouses). This definition of dependents applies only for purposes of section 4980H and does not apply for purposes of any other section of the Code. But see section IX.F. of the preamble for transition relief with respect to the requirement to offer coverage to dependents. 

The guidance does reiterate that the cost associated with determining penalty liability for employers is based on the cost and characteristices of employee-only coverage:

In contrast, an employee’s receipt of a premium tax credit or cost sharing reduction with respect to coverage for a dependent will not result in liability for the employer under section 4980H. Under section 4980H(b), liability is contingent on whether the employer offers minimum essential coverage under an eligible employer-sponsored plan, and whether that coverage is affordable and provides minimum value, as determined by reference to the cost and characteristics of employee-only coverage offered to the employee.  

To view the guidance in full click here.