Previous Page  20 / 24 Next Page
Information
Show Menu
Previous Page 20 / 24 Next Page
Page Background

The Comm

unity

Banker

20

The Affordable Care Act:

“ObamaCare” Delayed Again

By Brian G. Muse, Partner, LeClairRyan

O

COUNSELOR’S CORNER

n February 10, 2014 the IRS issued final regulations on

the employer shared responsibility provisions under

Section 4980H of the Internal Revenue Code. Most

noteworthy is the delay for employers with 50 and 100

employees, now given an additional year to comply

with the employer mandate in the ACA. Similarly,

employers with 100+ employees gain leeway with

the percentage of employees who must be covered by

insurance will be reduced from 95% to 70% for 2015

only. Q&A on the Final Regulations is available at:

http://www.irs.gov/uac/Newsroom/Questions-and-

Answers-on-Employer-Shared-Responsibility-Provi-

sions-Under-the-Affordable-Care-Act

The following areas were also covered in these

new regulations:

New Employers

New employers not in existence on any business day in the

prior calendar year are considered applicable large employ-

ers if in the current year the employer "expects" to employ an

average of at least 50 full-time employees. In the following

year, however, the employer must determine its status as an

applicable large employer using the ACA’s measurement rules

concerning the number of full-time employees and full-time

equivalents employed in the preceding year.

An Hour of Service?

Per the IRS, an hour of service means each hour an employee is

paid/entitled to payment for: (1) the performance of duties for

the employer; and (2) during which no duties are performed

for: vacation, holidays, illnesses, (including disability) layoffs,

jury duty and military duty or leave of absence. Exceptions

include volunteer service or income from outside the U.S.

Rejection of Coverage

If an employee who rejects coverage that is both affordable

and provides minimum value, he/she will not be eligible for a

premium tax credit (preventing the employer penalty if same

employee obtains coverage at an Exchange).

Extent of Penalties

The question often raised (but not fully answered) is: if an

employer offers approximately 90% (not full 95%) coverage

would that still subject an employer to the same penalty as an

employer who offers no coverage at all? Intuitively, it would

seem this would not be the case; however, the answer (per IRS

Q&A) suggests otherwise - an employer shared responsibil-

ity payment equal to the number of full-time employees the

employer employed for the year minus 30 multiplied by $2,000

(assuming at least one full-time employee receives a premium

tax credit).

Penalties Increase During Safe Harbor

The "inflation mechanism" for employer penalties will not

be affected by the transition relief discussed above, and will

increase during 2014-2016.