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 PPACA Marketplace Update:
IRS/US Treasury Dept. issue final regulations on PPACA "Employer Shared Responsibility"
Friends,
Following our newsletter on 2/10/24 detailing press coverage on this event, we wanted to provide you with the final regulations issued by the IRS and the US Treasury Dept. for the "Employer Shared Responsibility". These final regulations were issued on 2/10/14 and are geared towards providing small and medium sized groups with transition relief from the Health Care Reform law until 2016.
Transition Relief for Employer Groups:
Less than 50 full-time employees - Employer groups with less than 50 full time employees are not subject to any PPACA tax penalties derived from not offering group health insurance to their employees
At least 50 but less than 100 full-time employees - the final regulations from the IRS/US Treasury Dept. state that employers with fewer than 100 employees in 2014 will not be subject to the "Employer Shared Responsibility" until 2016 as long as the following conditions are met:
- The employer must employ on average at least 50 full-time equivalent employees but fewer than 100 full-time equivalent employees on business days during 2014
- During the period beginning February 9, 2014 and ending on December 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief (Note: reductions in workforce or hours are permitted for bona fide business reasons)
- During the period beginning February 9, 2014 and ending on December 31, 2015 (or for employers with non-calendar year plans, ending on the last day of the 2015 plan year) the employer does not eliminate or materially reduce health coverage, if any, it offered as of February 9, 2014. An employer will not be treated as eliminating or materially reducing health coverage if (i) it continues to offer each employee who is eligible for coverage an employer contribution towards the cost of employee-only coverage that is either at least 95% of the dollar amount of the contribution towards such coverage that the employer was offering on February 9, 2014 or is at least the same percentage of the cost of coverage that the employer was offering to contribute toward coverage on February 9, 2014; (ii) in the event of a change in benefits under the employee-only coverage offered, that coverage provides "minimum value" after the change; and (iii) it does not alter the terms of its group health plans to narrow or reduce the class(es) of employees and/or dependents to whom coverage under the plan was offered on February 9, 2014.
100 or more full-time employees - the final regulations from the IRS/US Treasury Dept. state that employers with at least 100 employees in 2014 or had at least 50 but less than 100 full-time employees in 2014 and do not qualify for the transition relief detailed above will be liable for the "Employer Shared Responsibility" penalties if:
- The employer does not offer health coverage or the employer offers coverage to fewer than 70% of its full-time employees and their dependents (95% after 2015), and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a Marketplace/Exchange; or
- The employer offers health coverage to at least 70% of its full-time employees and their dependents (95% after 2015), but at least one full-time employee receives a premium tax credit to help pay for coverage on a Marketplace/Exchange because the employer provided coverage was "unaffordable" or not of "minimum value."
Additional Information on Final Regulations
- For purposes of determining employer size, in 2015 employers can determine the number of full-time equivalent employees in the previous year by reference to a period of at least six consecutive months in 2014, instead of the full calendar year.
- Employers with non-calendar year plans will be able to begin compliance with the employer shared responsibility provisions at the start of their plan years in 2015 instead of January 1, 2015.
- The requirement that employers offer coverage to full-time employees' dependents in order to avoid potential penalties will not apply in 2015 to employers that are taking steps to arrange for such coverage in 2016.
- On a one-time basis, in 2014 preparing for 2015, plans may use a measurement period of six months and still be permitted to take advantage of a longer (e.g. 12 month) measurement period.
- Clarification is also provided with respect to crediting hours to various "a-typical" classifications of employees such as volunteers, seasonal employees, student employees, adjunct faculty, etc. The Treasury has indicated that they will issue final regulations shortly to address the streamlining of the employer reporting requirements.
To view a copy of the final regulations - CLICK HERE
To view a copy of the IRS "FAQ" - CLICK HERE
We will continue to keep you informed on the upcoming changes in the Patient Protection and Affordable Care Act. If you have any questions or concerns about these processes please contact Altruis Benefit Consulting at 877.442.5878 or info@altruisbenefit.com
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