On January 2, 2013, the Internal Revenue Services (IRS) released long awaited proposed rules governing the Affordable Care Act (ACA) employer responsibility provisions (commonly referred to as “pay or play” rules). The requirements generally take effect on January 1, 2014 for calendar year plans, and require employers to offer certain health coverage or pay a non-deductible excise tax penalty.
The new regulations are generally consistent with previously released regulations that describe how employers should count their employees to determine applicability of employer responsibility provisions. The new regulations also provide additional clarifications in several areas including responsibilities for employers that are part of a control group corporate structure, issues surrounding paid leave, seasonal employees, breaks in service, non-hourly and commission-based employees.
Perhaps the most notable provision of the new rules excludes spouses from the definition of “dependent” under the requirement that employers offer coverage to all full-time employees (30 or more hours per week) and their dependents or pay a penalty. Dependents include children, step-children, adopted children and foster children up to age 26.
Employers and others may submit comments on the proposed regulations until March 18, 2013, and instructions for doing so are included on pages 1-2 of the regulation.
While final rules may not be issued before decisions must be made about pay or play, there is additional guidance forthcoming that will assist employers, including a “minimum value calculator” that federal agencies say employers can use to figure out whether their plans pass the 60 percent actuarial limit test. Clarifications about the definition of “minimum essential coverage” for employers will also be issued, as well as “anti-abuse” regulations aimed toward employers that may attempt to circumvent penalties.