At Sterling Benefits, we are proactively working with multiple resources to dissect the various facets of the law and to understand the guidelines and timelines it presents to our clients. You can expect that we will provide ongoing communications and information as interpretation and implementation details continue to unfold from the government.

Our priority at Sterling Benefits is to stay focused on delivering value and quality customer service to our customers as we work together with health care reform. Significant changes will take place in 2014. In the meantime, there are some items that will require attention much sooner. We will keep you posted as details and clarifications from the government are made available. We encourage you to review this information and utilize our office as a resource in addressing questions and concerns.

Friday, December 28, 2012

IRS Releases Proposed Regulations on the Employer Mandate

On December 28, 2012, the IRS issued 144 pages of proposed regulations addressing the employer “shared responsibility” mandate (aka Play or Pay mandate) in the Affordable Care Act. In addition, the IRS issued a FAQ summarizing major points of the regulations. Some of the highlights include:

  • The IRS requires that coverage be offered to 95% of full-time employees and their dependents. The term "dependent" only refers to the employee's children under age 26 and not spouses.
  • Large employers will not face tax penalties for not offering coverage to spouses, who will be able to seek a federal premium tax credit to purchase health insurance in an exchange if other minimum essential coverage is not available (such as through the spouse's employer).
  • The employer shared responsibility provisions provide that an applicable large employer (for this purpose, an employer with 50 or more full-time equivalent employees) could be subject to an assessable payment if any full-time employee is certified to receive an applicable premium tax credit or cost-sharing reduction payment. Generally, this may occur where either:
    • The employer does not offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan;
    • The employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan that either is unaffordable relative to an employee’s household income or does not provide minimum value.
  • A “full-time employee” is defined an employee who is employed on average at least 30 hours per week.
  • There is transitional relief applied to non-calendar year plans currently in place, indicating that the mandates if the relief applies becomes effective on the first day of the plan year beginning after January 1, 2014. In general a large employer who currently offers a non-calendar year plan will not be liable for tax penalties for the months prior to the first day of their plan year beginning in 2014. This transition relief means that a large employer would not have to make mid-year changes to a non-calendar year plan in order to meet the law's coverage requirements.
  • The proposed regulations provide relief for large employers with calendar year plans that opt to apply a look-back measurement period to determine who is a full-time employee. For smaller employers, the proposed regulations also provide some transition relief for how they determine their large employer status in 2013 ahead of the January 1, 2014 compliance deadline.
  • The IRS will permit a one-time election change in Cafeteria Plans for employees opting Exchange coverage in 2014.

The DOL issued additional guidance in Frequently Asked Questions from Employers Regarding Automatic Enrollment, Employer Shared Responsibility, and Waiting Periods.

Infinisource has release a Shared Responsibility for Employers Infographic.
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