New Employer Shared Responsibility Penalty Guidance: Timely Employer Action Needed

by Patterson Belknap Webb & Tyler LLP
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In This Alert:

- A. What Is The Employer Shared Responsibility Penalty?

- What Is The “Failure To Offer Coverage Penalty”?

- How Is The “Failure To Offer Coverage Penalty” Calculated?

- What Is The “Unaffordable Coverage Penalty”?

- When Is Coverage “Unaffordable”?

- How Is The “Unaffordable Coverage Penalty” Calculated?

- B. What Is An “Applicable Large Employer”?

- C. Who Is A Ft Employee And Fte Employee?

- D. How Are Hours Of Service Counted?

- E. What Methods May Be Used To Determine Ft Employee Status?

- Ongoing Employees

- New Employees

- Changes In Employment Status Or Termination/Rehire Situations

- Transition Rules

- Measurement Period For Stability Period Beginning In 2014

- Applicable Large Employer Determination For 2014

- Dependent Coverage

- Variable Hour Employee Determination

- Fiscal Year Plan Years

- Fiscal Year Cafeteria Plans

- Assessment Of Health Care Penalties And Reporting Requirements

- Health Care Penalty Assessments

- Health Care Reporting

- Effective Date

- Questions Regarding Continuance Of Employer Health Plan

- Coverage And Possible Plan Or Workforce Changes

- Compliance Steps

- Excerpt from New Employer Shared Responsibility Penalty Guidance: Timely Employer Action Needed:

The Affordable Care Act, the federal health care reform law enacted in 2010, added a provision to the Internal Revenue Code (“Code”) (Code Section 4980H) that, beginning on January 1, 2014, may subject employers to an excise tax penalty if a covered employer fails to offer health plan coverage to a sufficient number of its employees and their dependents or if it offers coverage that is deemed unaffordable or fails to provide a certain prescribed minimum level of benefit value. This new penalty provision, formally known as the “employer shared responsibility penalty,” is often referred to as the “employer pay or play” provision. In this Alert, these new rules are referred to as the “Health Care Penalty” or “Health Care Penalties.”

The Internal Revenue Service and U.S. Treasury Department recently issued proposed regulations and related frequently asked questions concerning the Health Care Penalty (collectively, the “Proposed Regulations”). The rules are very complex and can require detailed consideration of the nature of an employer’s workforce, including the hours of service worked by employees. This Alert is intended to provide an overview of the Proposed Regulations, including some helpful transition rules, to assist employers in understanding the Health Care Penalty requirements that apply beginning in 2014.

Please see full alert below for more information.

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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.

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