Employers with at least 50 full-time or full-time equivalent employees that do not provide affordable minimum essential coverage for those employees and their dependents and have at least one full-time employee who receives subsidized exchange coverage must pay the penalty. According to the proposed rules, an applicable large employer with respect to a calendar year is defined as an employer that employed an average of at least 50 full-time employees (taking into account full-time equivalents) on business days during the preceding calendar year.
The IRS’ look-back measurement method that may be used to identify full-time employees for purposes of determining potential exchange coverage does not apply for purposes of determining status as an applicable large employer. Instead, the determination of whether an employer is an applicable large employer for a year is based upon the actual hours of service of employees in the prior year. However, the proposed guidance does provide transitional relief allowing use of a shorter look-back period in 2013 for purposes of determining applicable large employer status for 2014.
The proposed regulations say an applicable large employer member will be treated as offering coverage to its full-time employees (and their dependents) for a calendar month if, for that month, it offers coverage to all but 5% or, if greater, five of its full-time employees (provided that an employee is treated as having been offered coverage only if the employer also offered coverage to that employee’s dependents).
A public hearing has been scheduled for April 23. Persons who wish to present oral comments at the hearing must submit electronic or written comments by March 18.The proposed rule is here.