The Internal Revenue Service (IRS) seems to be reading some Patient Protection and Affordable Care Act (PPACA) employer coverage mandate provisions in ways that could help employers.
The draft regulations, and a related set of IRS answers to frequently asked questions (FAQ), would help the IRS, employers and benefits firms implement the PPACA “employer shared responsibility” provisions.
The provisions call for employers with at least 50 full-time equivalent (FTE) employees to provide a minimum level of health coverage for those employees starting in 2014 or else pay a penalty.
An employer is supposed to calculate the penalty by determining how many full-time employees it has, subtracting 30, and then multiplying the result by $2,000.
Comments on the proposed regulations are due March 18, and the IRS is planning to hold a public hearing on the draft April 23.
In some cases, the IRS has been less flexible than employers would have liked, Fensholt wrote in his commentary.
The IRS decided, for example, against delaying PPACA mandate reporting requirements for an employer with a plan year that’s different from the calendar year, Fensholt said.
The IRS wants to let an employer with a non-calendar plan year wait until the first day of the 2014-2015 plan year to begin paying penalties. But, even though the IRS would put off imposing the penalty payment requirement on the employer, “the employer will still have an obligation to make any applicable, and as yet undefined, reports to federal authorities for periods beginning January 1, 2014,” Fensholt said.
The IRS still has not given a precise definition of the extent of the “minimum essential coverage” that an employer must provide to avoid the PPACA mandate penalties, and the agency also has not yet given much detail about the “minimum value” of the “minimum essential coverage” that a PPACA-friendly plan must provide, Fensholt said.
But many of the definitions and interpretations proposed favor employers, Fensholt said.