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14
T H E P R I M E R U S P A R A D I G M
Sharing Responsibility Under the
Patient Protection and Affordable Care Act
Bianca S. Watts is an associate attorney at Wilke, Fleury, Hoffelt,
Gould & Birney, LLP in Sacramento, California. Her practice
includes employment litigation and general business litigation.
Wilke, Fleury, Hoffelt, Gould & Birney, LLP
400 Capitol Mall, Twenty-Second Floor
Sacramento, California 95814
916.228.7755 Phone
916.442.6664 Fax
bwatts@wilkefleury.com
www.wilkefleury.com
Bianca S. Watts
Many employers are struggling to
understand some of the more technical
aspects of the Affordable Care Act
("ACA") and its effect on employer
budgets. Specifically, employers are
looking for guidance on the complicated
issue of how to determine whether
workers qualify as full-time employees
("FTEs") for purposes of the ACA's
employer shared responsibility
provision and how to comply with the
limitation on waiting periods before
insurance coverage begins. Fortunately,
the IRS has issued guidance that sheds
light on the application of the employer
shared responsibility rules and the
90-day waiting period limitation.
The Basics of the Shared
Responsibility Provision
Most employers are familiar with the
individual mandate, which requires
individuals to obtain health insurance
either through their employer or
through a covered Health Insurance
Exchange or face penalties. However,
many employers remain confused
about the employer mandate and
basic requirements of the "shared
responsibility" provision. The ACA's
employer shared responsibility
provision applies to employers with 50
or more full-time employees or FTEs
(employees working 30 or more hours
per week). It requires such employers
to provide FTEs "minimum essential
coverage" or pay a penalty based
on the number of FTEs that are not
offered coverage. "Minimum essential
coverage" means group health coverage
under an eligible employer-sponsored
group health plan, defined as a plan
offered to employees of an employer
that is a governmental plan or a plan or
coverage available in the individual or
group market.
Beginning in 2014, each covered
employer will be assessed a penalty
if any FTE is certified as eligible to
receive a premium tax credit when
buying insurance in a state-based
"health insurance exchange." The
annual penalty is $2,000 per FTE in
excess of 30 workers.
New Safe Harbor Guidelines
The IRS's guidance addresses "safe
harbor" methods that employers may
use to determine which employees
are treated as FTEs for purposes of
the employer shared responsibility
provision. For ongoing employees,
employers are generally permitted to
apply a "look back" method that uses
"standard measurement periods" and
the "stability periods" that follow them.
The "standard measurement period"
is the period of time an employer
chooses to apply to determine whether
ongoing employees are FTEs. An
"ongoing employee" is one that has
been employed for at least one standard
measurement period. The period must
be at least three but not more than 12
consecutive months. The "stability
period," the period for which the
employee's status as an FTE or non-FTE
is locked in regardless of hours worked,
must run at least six calendar months
and at least as long as the standard
measurement period. An employee who
does not average at least 30 hours per
week during the standard measurement
North America