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The IRS recently issued notices 2012-58 and 2012-59 to provide
guidance on certain new rules under the Patient Protection and
Affordable Care Act (PPACA). Notice 2012-58 describes safe harbor
methods that employers may use to determine which employees should
be treated as full-time employees for purposes of the penalties
under Section 4980H. The section imposes a penalty on large
employers (i.e., employers with at least 50 full-time equivalent
employees) that either do not offer coverage to employees or offer
coverage that is inadequate and have at least one employee who has
enrolled in a nonemployer insurance program with government
financial assistance. The penalty under Section 4980H is $166.66
per employee per month for failing to offer coverage and $200 per
employee per month for offering inadequate coverage. The $166.66
monthly penalty is assessed for each full-time equivalent employee
in excess of 30, and the $200 monthly penalty is assessed only for
those employees whose coverage is inadequate.
Notice 2012-58 addresses several situations and approaches,
including the use of a look-back method, that employers may use to
determine whether an employee who works variable hours or is a
seasonal worker is a full-time employee for purposes of Section
4980H. A full-time employee is defined as an employee who works 30
hours or more a week.
Notice 2012-58 addresses the determination of full-time employee
status for both existing employees and new employees. For example,
it provides that a new employee who is not expected to work full
time can be employed without health insurance for an initial
measurement period of between three and 12 months, as determined by
the employer, during which time the employee's hours are
tracked. If at the end of that period, it is clear that the
employee worked an average of 30 hours a week or more, the employer
must offer health insurance to the employee for a period of at
least six months or for the length of the initial measurement
period (referred to as the "stability period"), whichever
is longer. If the employee worked on average fewer than 30 hours
per week, the employer may treat the employee as part-time for the
stability period.
In Notice 2012-59, the IRS issued temporary guidance regarding
the 90-day waiting period limitation in PPACA. For plan years
beginning on or after Jan. 1, 2014, a group health plan cannot
apply a waiting period that exceeds 90 days. The IRS plans to issue
regulations regarding the 90-day waiting period, but taxpayers can
rely on Notice 2012-59 until at least Dec. 31, 2014. New employees
reasonably expected to be full-time cannot be required to wait more
than 90 days to be enrolled in coverage offered by an employer. An
employer may impose a measurement period on a variable-hour
employee before determining whether the employee is a full-time
employee.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Internal Revenue Service has recently published an IRS Large Business & International Directive, which updates an earlier directive to field agents addressing the examination of capitalization and repair costs issues.
A state cannot include income in the apportionable base and then exclude the receipts and related factors that generated that very same income from the apportionment formula.
