The raft of government regulations that came with the latest delay in the Patient Protection and Affordable Care Act employer mandate emerged only after much negotiation between business, representatives of workers’ interests and federal officials.
The final rules – expressed across more than 200 pages – made plenty of headlines when they were released earlier this month. But what are the nitty-gritty details? What follows is a closer look at what the regulators had to say about six provisions with some of the greatest impact on the workplace:
1. Employer relief
Employers with more than 50 but fewer than 100 workers got several special concessions in the mandate. The regulators demonstrated an appreciation of the challenges many businesses face in this critical growth range, and offered several concessions to enable them to more smoothly integrate the act’s requirements into their benefits plans. Perhaps the most important was the postponing of penalties for noncompliance until 2016.
2. Full-time equivalent employees
The definition of a full-time equivalent employee is critical because it can mean the difference between being at 50 employees or being under. Other calculations in the law also use the FTE number. This is an area where employers got into a hair-splitting negotiation with the feds. Here’s how the final rules resolved it:
“A commenter suggested that the final regulations provide rounding rules for the monthly FTE calculation. The number of FTEs for each calendar month in the preceding calendar year is determined by calculating the aggregate number of hours of service for that calendar month for employees who were not full-time employees (but not more than 120 hours of service for any employee) and dividing that number by 120. The proposed regulations and these final regulations provide that in determining the number of FTEs for each calendar month, fractions are taken into account. In response to a request for a rounding rule, the final regulations provide, as an option, that an employer may round the resulting monthly FTE calculation to the nearest one hundredth. For example, an employer with a calculation of 30.544 FTEs for a calendar month may round that number to 30.54 FTEs.”
4. Temp agencies
A key question for employers was when separation officially occurs in the temp industry. The answer didn’t satisfy anyone. Here’s what the regulators had to say:
“Temporary staffing firms vary widely in the types of assignments they fill for their clients and in the anticipated assignments that a new employee will be offered. Accordingly, the final regulations do not adopt a generally applicable presumption. Accordingly, until further guidance is issued, temporary staffing firms, like all employers generally, may determine when an employee has separated from service by considering all available facts and circumstances and by using a reasonable method that is consistent with the employer’s general practices for other purposes, such as the qualified plan rules, COBRA, and applicable state law.”
6. Dependent coverage
Many benefits plans, particularly among companies at or near the 50-employee threshold, don’t currently cover dependents. Now, they have to, including “kids” up to the age of 26. So the mandate gives companies that don’t have dependent coverage extra time to integrate this into their plans. And they don’t even have to fully accomplish the mission; it’s enough, the rules say, to give it the old college try.
“Any employer that takes steps during its plan year that begins in 2014 (2014 plan year) toward satisfying the section 4980H provisions relating to offering coverage to full-time employees’ dependents will not be liable for any assessable payment under section 4980H solely on account of a failure to offer coverage to the dependents for that plan year. This relief is extended to plan years that begin in 2015 (2015 plan years).”