Mintz Levin Examines the ACA Premium Tax Credit Calculation

In "9.5% ≠ 9.56% (And Why It Matters to Applicable Large Employers)," Alden J. Bianchi of Mintz Levin explains that:

"While employers sometimes view the Affordable Care Act’s employer shared responsibility (or “pay-or-play”) rules in isolation, they don’t operate that way. Instead, they exist side-by-side with other provisions of the Act. In particular, the Act’s rules providing premium tax subsidies to low- and moderate-income individuals correlate with an employer’s liability for assessable payments. Of interest to employers is that, generally, where there are no individual subsidies, there are no employer penalties. In a recently issued revenue procedure (Rev. Proc. 2014-37), the Treasury Department announced adjustments to parameters that impact premium tax subsidies. One of the adjustments made changes to a table used to calculate an individual’s premium tax credit. While the adjustments addressed premium tax credits under the Act, it was not immediately apparent what impact, if any, the change would have on employers. As it turns out, the answer is, none."

To read more, click here.

Mintz Levin Examines Common Law Employees and the ACA

In "Common Law Employees and Offers of Coverage on Behalf of Other Entities under the Final Employer Shared Responsibility Regulations", Alden J. Bianchi of Mintz Levin explains that:

"Distinguishing employees who are full-time from those who are not takes up a good deal of real estate in final regulations published in the Federal Register on February 12 implementing the Act’s employer shared responsibility rules (the “final regulations”). When determining whether an employee is a full-time employee, it is also necessary to determine who employs the full-time employee."

To read more, click here.

New Study Finds Delay of ACA Employer Mandate to be Insignificant

The RAND Corporation recently published a study analyzing the impact of the one-year delay in the enforcement of the Affordable Care Act's (ACA) penalty on large employers that do not offer affordable health insurance coverage.

The RAND Corporation found that the delay will not have a significant impact on insurance coverage. They determined that only 300,000 fewer people, or 0.2% of the population, will have access to insurance from their employer. Furthermore, they indicated that nearly all of these individuals will get insurance from another source.

However, they found that the delay will result in $11 billion dollars less in federal revenue from employer penalties. If instead of a one-year delay, the employer mandate was repealed, federal revenue would be expected to decline by $149 billion over the next ten years

The RAND Corporation concludes that “The one-year delay in the employer mandate will have relatively few consequences, primarily resulting in a relatively small one-year drop in revenue; however, a complete elimination of the mandate would have a large cumulative net cost, potentially removing a nontrivial revenue source that in turn funds the coverage provisions in the ACA.”

A copy of the study is available here.

Senate Legislation Would Amend Definition of Full-Time Worker under ACA

Legislation recently introduced by Senators Susan Collins (R-ME) and Joe Donnelly (D-IN) would amend the definition of a full-time employee for purposes of the employee shared-responsibility provisions of the Affordable Care Act.

The “Forty Hours is Full Time Act of 2013” (S. 701) would amend the Internal Revenue Code by defining a "full-time employee" as an employee who is employed on average at least 40 hours per week, instead of the current 30 hours, and it would modify the number of hours considered to be equal to one “full-time equivalent” employee from 120 hours a month to 174.

S. 701, “Forty Hours Is Full Time Act of 2013” is available here.

Letter to President Obama is available here.

ERIC members and trial members can read more here.

BIG Delays in BIG ACA Rules

The Administration has delayed the employer shared responsibility penalty (and some reporting requirements) for one year.

First, we were told that the Administration had concerns about the “complexity” of the Affordable Care Act (ACA) health coverage reporting requirements under sections 6055 and 6056 of the Internal Revenue Code and that more time might be needed to “implement them effectively”. In recognition of these challenges, the Administration announced that these reporting requirements would not kick in for an additional year.

Because the reporting requirements are to be delayed for a year, the Administration concluded that it would be “impractical” to assess the employer penalty during 2014. Thus, they have also granted transition relief from the employer shared responsibility payments for 2014.

The posting on the White House website by Valerie Jarrett, who is a Senior Adviser to the president is available here.

The posting from Mark Mazur, who is Assistant Secretary for Tax Policy at Treasury is available here.

ERIC members and trial members can read more here.

Treasury and IRS Hear Testimony on the Shared Responsibility Rules

On April 23, 2013, the Treasury Department and Internal Revenue Service (IRS) heard testimony from over twenty groups and individuals about the Shared Responsibility proposed regulations. Panelists from the government included Alan Tawshunsky and Rachel Leiser Levy from the Treasury Department and Stephen Tackney and Kathryn Johnson from the Internal Revenue Service.

The proposed regulations detail the circumstances under which penalties can be imposed on large employers for failing to offer health coverage to at least 95% of their full-time employees (and their dependents) or for large companies that offer health coverage, if it is not affordable and/or does not satisfy the requirements for minimum value.

The hearing included testimony from Alden Bianchi of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. on behalf of The ERISA Industry Committee (ERIC). Mr. Bianchi reiterated a series of recommendations ERIC made to IRS and Treasury in a March 18 comment letter urging the agencies to revise the shared responsibility proposed regulations to better accommodate the implementation challenges and administrative complexities faced by large, multinational companies with diverse workforces. In particular, he emphasized that:

• Employers should be able to treat variable hour and fixed employees differently for purposes of the rules applicable to the proposed regulations’ measurement, stability and administrative periods.
• Hours of service should not be aggregated for an employee across all members of a controlled group.
• The coverage of dependents should be narrowed.
• The maximum administrative period should be extended to 3 months instead of 90 days.
• Special rules are needed for service contract employees.

The individuals from the government noted the following:

• Self-insured plans will qualify as minimum essential coverage.
• With respect to wellness programs, the people least able to afford higher premiums should be able to comply with the requirements.
• They want to avoid churning between employer-provided coverage and the Exchanges.
• Flexibility for employers is only bad if it harms employees.
• They would prefer not to create too many rules regarding shared responsibility.

And the best quote from the hearing was “When you hire someone, all you have are expectations.”

A copy of ERIC’s testimony is available here.
A copy of ERIC’s comment letter is available here.
The proposed regulation is available here.
Copies of comment letters and testimony are available here.

ERIC Recommends Revisions to Shared Responsibility Proposed Regulations

The ERISA Industry Committee (ERIC) filed comments today urging the Treasury Department and Internal Revenue Service (the Agencies) to revise the shared responsibility proposed regulations to better accommodate the implementation challenges and administrative complexities faced by large, multinational companies with diverse workforces.… More