The U.S. Treasury Department recently released new guidance to assist employers (generally those with 50 or more full-time or full-time equivalent employees) in preparing and planning for the 2014 requirement to offer affordable minimum essential health coverage to their employees, and to help employers who have close to 50 employees determine whether the requirement to provide affordable minimum essential health coverage applies to them. The guidance has been provided in the form of proposed regulations and appeared in the Federal Register on January 2, 2013. A series of Questions and Answers, written in more everyday language and published on the IRS web page, provides an effective summary of the guidance.
The proposed regulations and Questions and Answers contain some surprises for those who have closely followed the Patient Protection and Affordable Care Act (the "Affordable Care Act"). This Executive Alert provides an overview of the guidance; however, the BakerHostetler Healthcare Reform Team intends to publish future alerts that focus on specific aspects discussed in the proposed regulations. Most employers will find that the new guidance will help them determine and understand:
For those not already well-acquainted with the Affordable Care Act's "employer mandate" rules, beginning in 2014 employers with at least 50 full-time and full-time equivalent employees generally will be required to offer comprehensive, and affordable, health care coverage to their full-time employees and their dependents. If such a "large" employer:
The Treasury Department and the IRS previously issued four separate notices, to provide guidance (Notice 2011-36; Notice 2011-73; Notice 2012-17; and Notice 2012-58) regarding the employer shared responsibility mandate. Comments received in response to those Notices were considered and reviewed by the Treasury Department and the IRS when drafting the proposed regulations.
The proposed regulations expand considerably on what could be discerned from the statutory language used to describe the employer mandate. They provide substantially more detail about how to count the hours of service being rendered by hourly and non-hourly employees when determining the number of full-time and full-time equivalent employees an employer has and how to determine if and when an employer is subject to an assessable payment for having failed to satisfy the new mandate. For instance, additional clarity and detail was provided in the following areas:
As noted above, though, with the additional detail - and the additional clarity - came a number of surprises. Among the more prominent surprises were the following:
Before the IRS issues final regulations on this topic, the proposed regulations may be relied upon as guidance now as employers plan toward 2014, pending any other additional guidance or final regulations.
We will continue to monitor health care reform developments and issue additional Executive Alerts on targeted topics covered in these comprehensive proposed regulations and additional developments as such arise.
If you have any questions regarding this Executive Alert, please contact your BakerHostetler attorney, or: John J. McGowan at
—John J. McGowan, Jennifer A. Mills, and Deborah Bracy
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