Proposed Regs Clarify 90-day Waiting Period Rule Under the ACA

Under the ACA, group health plans may not impose waiting periods longer than 90 days. However, this provision raised several questions. Do employers have to offer coverage to part-time employees? Can employers require any conditions at all? In response to these issues, the IRS has issued new proposed regulations. Employers may rely on the new regulations until the end of 2014.

The new regulations have three key parts. First, the employer is in compliance as long as the employee can elect coverage within the 90 day waiting period. The employee does not actually have to elect coverage before that period expires. The second part addresses late and special enrollees. For these enrollees, the period before their enrollment does not count as a waiting period. Finally, employers can impose substantive eligibility conditions. These conditions do not violate the 90-day rule, unless they are designed to avoid compliance with the 90-day rule. So, for example, an employer can require that an employee be in an eligible job classification. Or, the employer could require that an employee achieve a certain licensure requirement.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

New Guidance on “Minimum Value” for Employer Health Plans

The ACA may assess penalties on certain employers if their health plans do not provide “minimum value.” Generally, minimum value means that the plan’s share of the total allowed costs of benefits must be at least 60% of the plan’s cost. The IRS has released new regulations that further explain this rule.

Under the rule, employer HSA contributions are counted as part of the plan’s share of costs. HRA contributions may also be counted under certain circumstances. But, wellness programs will not be counted, unless they are related to tobacco cessation. The rules also lay out safe harbors for plans and methods for calculating whether a plan offers minimum value.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

IRS Issues Proposed Regulations on Employer Shared Responsibility

The IRS has released proposed regulations explaining employer duties under the ACA. The regulations apply to employers who have more than 50 full-time employees or equivalents. Such employers may have to pay penalties if they do not offer affordable coverage to their employees.

In part, the regulations explain how the ACA affects employers. For example, they explain how to count full-time employees. The regulations provide sufficient detail that employers can begin to plan for 2014.

The IRS has established a new safe harbor for minor lapses in coverage. An employer offering affordable coverage generally will not violate the Act if it covers at least 95% of its employees. The IRS has also included rules that will make complying easier for employers who previously provided insurance for their employees. Similarly, the IRS will provide relief for employers who are close to the 50 full-time employee threshold.

Detailed information will become available at www.pvwlaw.com under Legal Articles and Information.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com