How Do Globally Mobile Employees Affect ACA Rules?

But how do globally mobile employees (e.g., those on a long-term assignment to the U.S. or abroad, or who frequently cross borders on business travel) factor into the equation? An “Insights” report from PwC’s Human Resource Services and Global Mobility addresses this question.

According to the report, recent guidance opens the possibility that coverage under a foreign insured plan for expatriates may also qualify as minimum essential coverage (MEC), satisfying the individual mandate for foreign employees working in the U.S. To meet this exemption, the plan must be provided by an insurance company that is regulated by a foreign government, the plan sponsor must notify the participants that the coverage is intended to be MEC, and the sponsor must also file an annual report with the U.S. Internal Revenue Service (IRS) about the plan and the individuals covered.

Determining whether a firm is a large employer for purposes of the ACA is done across a controlled group, PwC says. For example, a U.S. parent entity and its wholly owned subsidiary, or a U.S. subsidiary with a foreign parent, would both be combined to determine if the 50-employee threshold is met. Only hours of service that relate to services for which the individual receives U.S.-source income are counted, so a global employer will not take into account employees living and working outside the U.S. who do not have U.S.-source income.

Also, for purposes of determining which workers are full-time employees, hours of service for which an employee receives foreign-source income are not considered, so employees who do not receive U.S.-source income are generally not deemed to be full-time employees and therefore are not required to be offered coverage, nor are they included in determining whether the employer meets the threshold number of employees covered to avoid penalties.

PwC notes the U.S. government has extended the time for certain expatriate health plans to meet the ACA benefit mandates to December 31, 2016, and has said such plans are deemed to be MEC. The term "expatriate health plan" refers to an insured group health plan in which enrollment is limited to primary insured persons for whom there is a good faith expectation that such individuals will reside outside of their home country or outside of the United States for at least six months of a 12-month period, as well as any covered dependents. This transitional relief for expatriate health plans was granted so the U.S. government can determine what further actions may be appropriate.

The U.S. Department of the Treasury and the Internal Revenue Service issued final regulations implementing the employer responsibility provisions under the ACA earlier this week (see “Treasury Modified rules for ACA Employer Mandate”).

More information about globally mobile employees and the ACA, including action steps for employers, is in the PwC report, available here.