One of your employees (we’ll call him “Don”) cannot enroll in your health insurance plan because you classify him as “part-time” (one who works less than 30 hours a week). This forces Don to get health insurance through a government exchange under the Affordable Care Act – you know, “Obamacare.” Furious about his exclusion from your health plan, Don “blows the whistle” with the Internal Revenue Service (IRS). Don complains that you erroneously classified him as a part-time employee, when in fact he often works more than 30 hours a week. The IRS agrees, hits your company with a multi-million dollar tax penalty based on your misclassification of Don, and then gives Don a six-figure reward for reporting you. Science fiction? Not anymore.

Embedded within the Affordable Care Act (ACA) are significant employment litigation risks that have virtually nothing to do with the structure or content of health insurance plans. For illustrative purposes, consider this highly-condensed summary of ACA: If you are a “Large Employer,” which means you have at least 50 full-time employees, you must offer compliant health insurance coverage to at least 70% of your full-time employees in 2015 (95% in 2016). You need not offer coverage to your “part-time” employees – those who work less than 30 hours a week. Failure to meet this 70% level of coverage can result in a draconian tax penalty: $2,000 per year for nearly each of your full-time employees, even those who are enrolled in your health insurance plan. If you have 1,000 full-time employees, that’s almost $2 million – and it is a non-deductible tax expense.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  Affordable Care Act, Employee Rights, Employer Group Health Plans, Employer Liability Issues, Employer Mandates, Health Insurance, Health Insurance Exchanges, Healthcare, IRS, Misclassification, Part-Time Employees, Popular

Published In: Health Updates, Labor & Employment Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Venable LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »