January 2013 Health Care Reform
Posted on: January 16, 2013Categories: HR & ComplianceThis month’s Health Care Reform post is about “Pay or Play”. We are focusing on Coverage for Substantially All Full-Time Employees and Dependents and Common Ownership Aggregation. The 95% “substantial compliance” rule benefits employers. Prior guidance in this area included no margin for error, so if an employer missed an employee who was full-time and not offered group health coverage, went to the exchange and received a premium subsidy, the employer would have had to pay a penalty on all full time employees (FT emps-30 x $2000=Penalty). With the new ruling, if that scenario had happened and the employer had covered 95% of the eligible then the employee would not be subject to the penalty. This is a plus for employers that may have been subject to a penalty due to a mistake or oversight.
On the common ownership, IRS controlled group rules apply to entities with common ownership. With this new guidance, the penalty analysis would be done at the specific employer level. Depending on how groups are treated under the Code’s aggregation rules, will determine how the penalty is calculated. If the combined total meets the large employer threshold, each separate member of the group is subject to the pay or play rules, even those companies that on their own do not have enough employees to meet the threshold. Although the regulations are not final, employers may rely on them until further guidance is issued. Click the documents below for more information on these new regulations.
Supporting Documents
Click here for more information on Pay or Play Penalty-Common Ownership Aggregation Rules
Click here for more information on Pay or Play Penalty Coverage for Full Time Employees & Dependents
Click here to visit the IRS website on Shared Responsibility for Employers Regarding Health Coverage
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