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Regulation and Compliance > Federal Regulation > IRS

IRS: We'll Address Shared Responsibility Soon

By Allison Bell

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Employers should check back with the Internal Revenue Service (IRS) in a bit to see how they ought to implement some of the coverage access provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA).

Officials at the IRS give variations on that advice in the answers to several of the frequently asked questions (FAQs) included in IRS Notice 2012-17.

The IRS issued the notice to address employer questions about PPACA provisions that are supposed to expand worker access to group health plans.

The provisions include:

  • Automatic enrollment rules, which require employers with more than 200 full-time employees to make joining the health plan a default option for full-time workers. (Section 18A of the Fair Labor Standards Act (FLSA))
  • Employer “shared responsibility” rules, which require employers with 50 or more full-time employees to provide affordable health coverage for workers or else pay a penalty. (Section 4980H of the Internal  Revenue Code)
  • Waiting period rules, which affect when group health coverage actually starts for a worker who is eligible for the health plan. (Section 2708 of the Public Health Service Act) 

The IRS — an arm of the U.S. Treasury Department — is working with agencies at the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Labor to develop regulations and administrative guidance to respond to the questions about the coverage access questions and other matters.

The IRS officials note that the Treasury Department and HHS will be putting out notices of their own that are similar to Notice 2012-17.

PPACA requires employers to begin complying the automatic enrollment requirement in 2014.

In the real world, employers probably will not have to comply with the automatic enrollment requirement until later, IRS officials say.

The Labor Department will need extra time to work on the regulations because the regulations must be compatible with other new and existing regulations and employers will need time to implement the regulations, officials say.

The Labor Department does not believe employers will have to comply with the automatic enrollment requirement until the final regulations take effect, officials say.

Officials also talk about other batches of guidance that are in the works:

  • A safe harbor that will let employers use Form W-2 wages, rather than an employee’s Form 1040, to determine whether the group coverage offered to an employee is affordable for purposes of escaping from having to pay the irresponsible employer penalty.
  • Guidance on how  the 90-day waiting period provision and the employer responsibility penalty provision will work together. During a new employee’s waiting period, a group health plan sponsor likely will not have to pay the irresponsible employer penalty for that employee, officials say.
  • Guidance on how to determine whether an employee is a full-time employee.

The guidance on determining whether an employee is a full-time employee likely will give an employer 6 months to determine whether a newly hired employee is a full-time employee, and the employer likely will not have to pay an irresponsible employer penalty for the new employee during that 6-month period, officials say.

The IRS may recommend letting an employer decide whether a new employee is a full-time employee by looking at whether the new employee is reasonably expected to work an average of 30 or more hours per week on an annual basis and whether the employee’s hours during the first months indicate how much the employee likely will work every year.

IRS officials emphasize that the answers given in Notice 2012-17 represent the agencies’ ideas, not necessarily advice set in stone.

“Guidance that employers may rely upon with respect to the issues addressed  below will be provided with sufficient lead time for employers to comply,” officials say. “Comments are  requested on these approaches.”

Comments are due April 12.

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