The Internal Revenue Service (IRS) recently released a Notice of Proposed Rulemaking (NPRM) on Shared Responsibility for Employers Regarding Health Coverage (the Employer Mandate) under the Affordable Care Act (ACA). The NPRM largely incorporates previously released guidance on the subject and employers may rely on the proposed regulations until final regulations are issued. The Employer Mandate requirements take effect on January 1, 2014.
The Employer Mandate provides that employers with 50 or more full-time employees (including full-time equivalent employees) will be required to pay a penalty if any full-time employee receives a premium tax credit or cost-sharing reduction to purchase health coverage through an Affordable Health Insurance Exchange (Exchange). Generally, an employee is eligible for a cost-sharing subsidy if: (1) an employer does not offer its full-time employees and dependents the opportunity to enroll in coverage; or (2) an employer offers its employees and dependents the opportunity to enroll in coverage, but the coverage is “unaffordable” or does not provide “minimum value.”
A full-time employee is an employee (including seasonal employees) who provides an average of 30 hours of service per week, however there is a seasonable employee safe harbor. When an employer’s workforce exceeds 50 full-time employees for no more than 120 days or four calendar months (which need not be consecutive) during a calendar year, the Employer Mandate does not apply if the employees in excess of 50 during that period were seasonal employees. Employers may use a reasonable, good faith interpretation of the term seasonal worker until the IRS issues further guidance.
The NPRM also provides further guidance on calculating full-time status; defines dependents as children up to age 26, but does not include spouses in the definition; provides more certainty with regard to the affordability of coverage; and provides further guidance on the calculation of the penalty.
In the coming days, Western Growers will make available its new white paper, Health Care Reform Update January 2013, which explains the ACA’s Pay or Play Rules in great detail. In addition, Western Growers will be conducting a webinar on February 12 to help educate members about the ACA’s complex requirements. Stay tuned to Spotlight for further details and updates on new ACA implementation developments.
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