Adding a one-month orientation period may help an employer avoid complying with the new health benefits mandate by about one-third. Federal agencies are offering employers a benefits-free orientation period option in a new batch of final regulations.
The Internal Revenue Service (IRS), the Employee Benefits Security Administration (EBSA) and the U.S. Department of Health and Human Services (HHS) are preparing to publish the regulations, Ninety-Day Waiting Period Limitation (CMS-9952-F2) (RIN 0938-AR77), in the Federal Register Wednesday.
The new regulations implement part of the “employer shared responsibility” provisions created by the Patient Protection and Affordable Care Act (PPACA).
Section 4980H of the Internal Revenue Code (IRC) now calls for most large and midsize employers to offer “minimum essential coverage” (MEC) to employees. If employers fail to offer MEC, and some workers end up qualifying for Medicaid or for PPACA public exchange plan subsidies through the new PPACA public exchange system, the employers could end up having to pay penalties. An employer can keep a new employee out of the employer coverage mandate calculations during a 90-day waiting period.
The Obama administration has said it wants to start applying the mandate provision to employers with 100 or more employees Jan. 1, 2015. If agencies stick to that schedule, employers with 51 to 99 employees may be able to wait until Jan. 1, 2016, to comply if they agree to abide by transition relief program rules. Midsize employers that want to cut back on health benefits might have to start complying with the mandate in 2015.