By Ron Bachman, Chairman of Editorial Advisory Board, The Institute for HealthCare Consumerism
Who: An employer whose workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year.
When: Beginning Jan. 1, 2014, employers with 50 or more full-time workers are required to provide health coverage or incur applicable penalties. At least through the end of 2014, employers may rely on the:
Employers will not be required to comply with any subsequent IRS guidance that is more restrictive until at least Jan. 1, 2015.
What: Determining the PPACA legally recognized number of full-time employees is critical to establishing compliance with aspects of PPACA requirements and exposure to certain coverage penalties.
A full-time employee with respect to any month is an employee who is employed on average at least 30 hours of service per week. To determine the number of full-time workers can be complicated.
Executive Summary: The IRS has put out guidelines for the calculation of full-time employees. It is not as easy as one might assume. In addition there are safe harbor and transition rules that apply.
There are two safe harbor options allowed when determining an employee’s full-time status:
An employer will not be subject to a penalty if the coverage offered to an employee is affordable based on the employee’s Form W-2 wages. This is often referred to as the affordability safe harbor.
In addition, use of any of the safe harbor methods described above are not required, but optional.
Actions: Employers will need to calculate the number of full-time workers related to PPACA requirements. It may be necessary to consider employment contracts and work schedules during 2013 in preparation for this 2014 requirement. Employers will need to be in compliance or incur penalties. Employers should check with their compliance and legal teams, insurance brokers, agents, consultants and insurers in preparation for the changes to be implemented in 2014.
For more details see IRS Notice 2012-58 at http://www.irs.gov/pub/irs-drop/n-12-58.pdf
The information presented and contained within this article was submitted by Ronald E. Bachman, President & CEO of Healthcare Vision. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult your legal advisors to determine the laws and regulations impacting your business.
Practicing medicine or law without a license is illegal. Politicians and bureaucrats playing actuary can be even more damaging to large populations. Actuaries are insurance professionals who price insurance policies based upon population risk factors and future expected claims.
Bachman's Banter: Health FSAs are used to pay or reimburse certain expenses allowed by IRS Code 213(d) for Qualified Medical Expenses (QMEs). Employers may amend their plan documents to allow participants to rollover up to $500 of unused funds from their Health FSAs remaining at the end of the plan
On October 31, 2013, Treasury published Notice 2013-71 ("Notice") which liberalizes the FSA "Use-or-Lose" rule ("Use-or-Lose" or the "Rule"). Use-or-Lose requires that unused amounts remaining at the end of a plan year in a health FSA be forfeited to the employer.
Although there has been a steady roll-out of health care reform guidance since the Patient Protection and Affordable Care Act ("PPACA") was enacted on March 23, 2010, the statute is rapidly approaching its most transformative phase with a number of substantive provisions that begin to take effect January 1, 2014.
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