Employer health coverage questions addressed

The IRS and Treasury Department, along with two other federal departments, on Thursday further described planned guidance on provisions for employer-sponsored health coverage mandated by the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, scheduled to take effect in 2014.

Treasury and the IRS issued Notice 2012-17 covering frequently asked questions (FAQs) by employers. The Departments of Labor and Health and Human Services simultaneously issued substantively identical notices, and the three departments will collaborate in developing the anticipated guidance.

Automatic enrollment to be delayed

Under regulations to be issued by the Labor Department, employers with more than 200 employers are required by the PPACA to automatically enroll new full-time employees in a health benefit plan they offer. FAQs issued last year indicated the Labor Department planned to issue the regulations by 2014. However, according to the FAQs released Thursday, Labor says the regulations will not be ready to take effect by 2014, because of a need for coordination in developing the guidance and its smooth implementation. Moreover, Labor has taken the position that employers are not required to comply with the automatic enrollment provisions until it issues the regulations.

Counting full-time employees

The FAQs also described planned approaches to determining whether an employee meets the 30-hour-per week threshold for being considered a full-time employee and thus counted toward the threshold of 50 or more employees that subjects an employer to the “shared responsibility” provisions of Sec. 4980H. Under those provisions, an employer is subject to a penalty if the employer-sponsored health coverage does not provide “minimum essential coverage” or is not affordable relative to the employee’s household income.

The IRS and Treasury are considering a safe harbor of a look-back period of three months (and not more than 12 months) for determining if an employee meets the definition of a full-time employee. This approach was outlined in Notice 2011-36.

Another planned safe harbor will allow use of the employee’s Form W-2 wages, in lieu of household income, to determine whether coverage is affordable.

Waiting period

The PPACA also limits to 90 days a group health insurer’s enrollment waiting period. The agencies are developing guidance on how to coordinate this period with the look-back safe harbor for determining the number of full-time employees.

Comments are requested by April 9 and should be sent to the Labor Department in a form and manner described in the notice. All comments will be shared by the three departments.

—Paul Bonner (pbonner@aicpa.org) is a JofA senior editor.

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