“ERIC’s members have a vital interest in ensuring that the shared responsibility provisions do not impose unnecessary administrative burdens on large employers and do not limit employers’ flexibility to design cost-effective health benefits that meet the needs of their work force,” said ERIC President Mark Ugoretz.
To that end, ERIC said it strongly endorsed the proposal in the notice that Internal Revenue Code section 4980H(a) liability should not apply to an employer that offers minimum essential coverage to substantially all of its employees.
“The most compelling concern for ERIC’s members is the provision imposing section 4980H(a) liability. If this provision is interpreted broadly, it could require an employer to pay a penalty for hundreds of thousands of employees merely because one full-time employee does not receive minimum essential coverage,” said Ugoretz. “ERIC believes that this harsh result is not required by the statute and is contrary to the purpose of the shared responsibility provisions.”
ERIC’s recommendations on the shared responsibility provisions include that the section 4980H(a) liability:
- Should not apply with respect to employees who are offered minimum essential coverage;
- Should apply on an employer-by-employer basis rather than on a controlled-group basis; and
- Should not apply with respect to nonresident aliens and other employees who are exempt from the individual mandate.
ERIC also expressed concern that the requirement to count hours of service to identify full-time employees will impose a substantial administrative burden on employers with tens of thousands of workers employed by diverse businesses around the world, and offers several recommendations to address this issue.
While the use of “measurement” and “stability” periods should be helpful in reducing the administrative burden on large employers, ERIC also offers a number of suggestions that would preserve the flexibility of employers who wish to utilize this approach.
In a separate letter, ERIC offered recommendations on the ACA's provisions prohibiting plans and insurers from applying a waiting period in excess of 90 days.
ERIC also urged the Departments of Treasury/IRS, Labor, and Health and Human Services to coordinate the shared responsibility rules under section 4980H with the 90-day waiting period limitation, including that the shared responsibility penalties under section 4980H should not apply during a waiting period.
ERIC’s comment letter on Shared Responsibility is available at http://www.eric.org/forms/uploadFiles/29A7B00000005.filename.ERIC_Comments_on_Shared_Responsibility.pdf. Their comments on the 90-Day Waiting Period are available at http://www.eric.org/forms/uploadFiles/29A6D0000A6F0.filename.ERIC_Comments_on_90-day_Waiting_Period.pdf
The Treasury Department and Internal Revenue Service on May 3 requested comments (Notice 2011-36) on issues relating to the shared responsibility provisions included in the PPACA, where employers with 50 or more full-time employees beginning in 2014 that do not offer health coverage to their full-time employees may be required to pay a penalty (see Regulators Seek Employer Input on PPACA Provisions). The notice also requests input on how the government should apply the ACA's provisions limiting the ability of plans and issuers to impose a waiting period for health coverage of longer than 90 days.