The DOL has issued the regulations on the Affordable Care Act which in part address seasonal workers. As indicated in the regulations these are not limited to agricultural workers or retail workers. Think of workers at golf clubs or summer camps for example.
Section 4980H(c)(2)(B)(ii) provides that if an employer’s workforce exceeds 50 full time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not an applicable large employer. Notice 2011 36 provided that, for this purpose only, four calendar months would be treated as the equivalent of 120 days. In response to comments, and consistent with Notice 2011 36, these proposed regulations provide that, solely for purposes of the seasonal worker exception in determining whether an employer is an applicable large employer, an employer may apply either a period of four calendar months (whether or not consecutive) or a period of 120 days (whether or not consecutive).
Because the 120 day period referred to in section 4980H(c)(2)(B)(ii) is not part of the definition of the term seasonal worker, an employee would not necessarily be precluded from being treated as a seasonal worker merely because the employee works, for example, on a seasonal basis for five consecutive months. In addition, the 120 day period referred to in section 4980H(c)(2)(B)(ii) is relevant only for applying the seasonal worker exception for determining status as an applicable large employer, and is not relevant for determining whether an employee is a seasonal employee for purposes of the look back measurement method (meaning that an employee who provides services for more than 120 days per year may nonetheless qualify as a seasonal employee). See section II.C.2. of this preamble for a discussion of the application of the look back measurement method to seasonal employees.
For purposes of the definition of an applicable large employer, section 4980H(c)(2)(B)(ii) defines a seasonal worker as a worker who performs labor or services on a seasonal basis, as defined by the Secretary of Labor, including (but not limited to) workers covered by 29 CFR 500.20(s)(1) and retail workers employed exclusively during holiday seasons. This definition of seasonal worker is incorporated in these proposed regulations. The Department of Labor (DOL) regulations at 29 CFR 500.20(s)(1) to which section 4980H(c)(2)(B)(ii) refers, and that interpret the Migrant and Seasonal Agricultural Workers Protection Act, provide that “[l]abor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year. A worker who moves from one seasonal activity to another, while employed in agriculture or performing agricultural labor, is employed on a seasonal basis even though he may continue to be employed during a major portion of the year.”
After consultation with the DOL, the Treasury Department and the IRS have determined that the term seasonal worker, as incorporated in section 4980H,is not limited to agricultural or retail workers. Until further guidance is issued, employers may apply a reasonable, good faith interpretation of the statutory definition of seasonal worker, including a reasonable good faith interpretation of the standard set forth under the DOL regulations at 29 CFR 500.20(s)(1) and quoted in this paragraph, applied by analogy to workers and employment positions not otherwise covered under those DOL regulations.
Several commenters suggested that seasonal workers not be counted in determining whether an employer is an applicable large employer. However, because section 4980H(c)(2) requires the inclusion of seasonal workers in the applicable large employer determination (and then excludes them only if certain conditions are satisfied), this suggestion is not adopted.
The Department of Labor (“DOL”) has issued Technical Release 2013-02 outlining employers’ obligations to provide notice to employees of coverage options under the Affordable Care Act’s health insurance exchanges (which the Departments have re-branded as “marketplaces”). The original deadline to provide this notice was March 1, 2013; however, the DOL delayed the requirement pending regulations to be issued at a later date. Although the DOL has still not released the promised regulations, the guidance sets a new effective date of October 1, 2013, the same day that open enrollment on exchanges is scheduled to begin. The DOL said that it issued this guidance in response to employer requests for model notices, as well as to coordinate with recent IRS guidance on minimum value.
Content & Delivery. The guidance reiterates that the notice requirement applies to all employers who are subject to the FLSA. These employers must provide notice to current employees by October 1, 2013. Regarding new employees, the guidance specifies that, beginning on October 1, 2013, employers must provide notice to new employees at the time of hiring. For 2014, however, the DOL will consider notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. The notice must be provided automatically and free of charge. While the notice must be in written form, it may be provided via mail or electronically (if existing requirements for electronic disclosures are met).
The notice must be written in a manner calculated to be understood by the average employee and must inform employees of the following:
- information regarding the existence of the Marketplace (again, formerly referred to as exchanges), including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
- that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code, if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs and the employee purchases a qualified health plan through the Marketplace; and
- if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
To satisfy the content requirements, model language is available on the DOL’s website at www.dol.gov/ebsa/healthreform. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan for some or all employees. Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.
The language of the model notices is relatively straightforward; however, the notices leave out certain important information that will undoubtedly create additional challenges and frustration for employers’ HR departments. For example, although the content requirements specify that employers must inform employees of the manner in which the employee may contact the Marketplace to request assistance, the model language only directs an employee to the HealthCare.gov webpage for more information. The model notices also are not state specific–i.e. they do not specify what type of exchange will be run in the particular state.
This guidance will remain in effect until the DOL issues regulations or other guidance. The DOL specified that future regulations or other guidance on these issues will provide adequate time to comply with any additional or modified requirements. When that additional guidance will come is unclear; however, the model notices’ approval by the Office of Management & Budget (required under the Paperwork Reduction Act) expires on November 30, 2013.
Deadline for employers to comply with notice requirements is October 1, 2013.
Article courtesy of Worklaw® Network firm Lehr Middlebrooks & Vreeland, P.C.
Here are some excellent resources regarding the Affordable Care Act:
- 4/18/13 Webinar Q&A
Also check your BNA State Law Summary for information on State Mandates and Health Care Exchanges.
The Department of Labor’s Employee Benefits Security Administration has updated its website with the Annual Report on Self-Insured Group Health Plans:
- Annual Report to Congress, available at www.dol.gov/ebsa/pdf/ACAReportToCongress033113.pdf
- Appendix A, available at www.dol.gov/ebsa/pdf/ACA-ARC2013.pdf
- Appendix B, available at www.dol.gov/ebsa/pdf/ACASelfFundedHealthPlansReport033113.pdf
- News Release, available at http://www.dol.gov/ebsa/newsroom/2013/EBSA040113.html
The Occupational Safety and Health Administration (OSHA), a division of the Department of Labor, has issued an interim final rule implementing Section 1558, the Affordable Care Act’s (ACA) anti-retaliation provision. Section 1558 expressly prohibits an employer from retaliating against an employee for engaging in any of the protected activities under the statute, which includes, among other things, receiving a federal tax credit or subsidy to purchase insurance coverage. OSHA has also issued a fact sheet that outlines how employees may file a retaliation complaint under the ACA.
- Section 1558 provides that an employer may not discharge or in any manner retaliate against an employee because he or she:
- received a premium tax credit or a subsidy to purchase health care coverage;
- provided or caused to be provided (or is about to provide or cause to be provided) to the employer, the federal government, or the attorney general of a state information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of Title I of the ACA;
- testified, assisted, or participated, or is about to testify, assist, or participate in a proceeding concerning such violation;
- objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of Title I of the ACA, or any order, rule, regulation, standard, or ban under Title I of the ACA.
Title I of the ACA includes a range of insurance company accountability policies such as: the prohibition of lifetime dollar limits on coverage, the requirement for most plans to cover recommended preventive services with no cost sharing, the prohibitions on the use of factors such as health status, medical history, gender, and industry of employment to set premium rates, and, starting in 2014, protections against pre-existing condition exclusions.
The interim final rule establishes the procedures and timeframes for handling retaliation complaints, including OSHA’s investigation, hearing, and appeals procedures. The anti-retaliation provision adopts procedures similar to those used by OSHA to enforce other whistleblower statutes under its jurisdiction. Under the ACA, an employee has 180 days from the alleged retaliation in which to file a whistleblower complaint with the Secretary of Labor. The employee need only have a subjective, good faith, and objectively reasonable belief that the complained-of conduct violates the whistleblower protections. The employee does not, however, need to prove that the conduct complained of constitutes an actual violation of law.
Section 1558 also includes an employee-friendly burden of proof. The employee must prove by a preponderance of the evidence that his or her participation in a protected activity was a contributing factor to the employment action taken against him by the employer. The burden then shifts to the employer to prove by clear and convincing evidence—a much more difficult burden of proof—that the employer would have taken the same action against the employee if the employee had not engaged in the protected conduct.
OSHA will investigate the complaint and make a determination. OSHA’s findings become final unless appealed within 30 days. Either party may request a hearing before an administrative law judge, whose decision may be appealed to the DOJ’s Administrative Review Board. An employee would be entitled to file a complaint in federal court if a final agency order is not issued within 210 days of the filing of the initial complaint, or within 90 days after the employee receives OSHA’s findings.
If a violation is found, remedies include reinstatement, compensatory damages, back pay, as well as all costs and expenses (including attorney’s fees and expert witness fees) reasonably incurred in filing the complaint. If the Secretary deems the complaint to have been brought in bad faith, it may award the employer up to $1,000 in reasonable attorney’s fees.
Employee rights in Section 1558 cannot be waived and are not subject to arbitration, regardless of whether or not the employee has signed a mandatory arbitration agreement.
The ACA’s anti-retaliation provision adds another layer of concern to employers’ efforts to comply with the ACA’s confusing and often inconsistent obligations. Additionally, the recent trend has been for federal agencies to aggressively enforce and expand coverage under the respective statutes they administer. With healthcare being the Obama Administration’s leading policy initiative, this trend is likely to continue with enforcement of ACA protections.
For example, it is possible that the agencies will use this provision to combat employers’ attempts to reduce their workforce or reduce employees’ hours in an effort to manage employer mandate related costs. Because the ACA’s anti-retaliation provisions create additional classes of protected individuals who did not previously receive special protection, employers should make it a priority to train supervisors regarding the practical employee relations issues related to the ACA.
Article courtesy of Worklaw® firm Lehr Middlebrooks & Vreeland (www.lehrmiddlebrooks.com)
This morning the U.S. Supreme Court upheld President Obama’s Health Care Affordability Act. The court essentially ruled its penalty provisions were akin to a tax. So what does this mean for insurance brokers and their clients? Here are a few of my quick thoughts:
- If you have been avoiding learning the law hoping it would somehow be overturned, it’s time get reading. The best place to start is http://www.dol.gov/ebsa/healthreform/. It is important to know the law not just as a broker or boss, but to also protect your family. Knowledge is power, so read it.
- Revisit the thinking behind benefits in the first place. Why do we even have them? To attract employees, to retain employees, and to motive them by showing that we care. And to do those things better than our competitors. Remember that while pay is an economic contract, benefits have been traditionally been viewed as a social contract. Bang for the buck; a dollar spent on a social contract offering is worth more than one spent on an economic one. Currently employees view their benefits as more important than their base pay. Even if it eventually flips back the other way it’s a 50/50 deal. If we choose to offer benefits, the more an employee pays for them, the less it becomes a social contract. We must also constantly market the benefit to get the value in hiring, retention, and motivation. As in the words of Barbers Book of 1000 Proverbs, “The greatest benefit is the one last remembered.”
- The main point is this: Don’t underestimate the value of benefits and make sure to squeeze every ounce of value out of providing them!
- Of course, the ultimate solution is better health. For starters, obesity is killing us. Employers would be wise to invest in wellness programs and healthy food offerings. Provide free healthy food, easy to access filtered water, etc., no matter the size or make-up of your company. The payback in productivity, etc. will more than offset the cost. Think of it this way: Would you rather have your employee go for fast food 5 days a week or the free salad in the lunchroom? Who do you think performs better all afternoon?
- We will conduct a Webinar on this decision and what it means for you in the next few days.
Below is a brief summary of the decision. You can read it in its entirety by going to http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf.
National Federation of Independent Businesses v. Sebelius (US 11–393 6/28/12) Patient Protection and Affordable Care Act
In 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. One key provision is the individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage. 26 U. S. C. §5000A.For individuals who are not exempt, and who do not receive health insurance through an employer or government program, the means of satisfying the requirement is to purchase insurance from a private company. Beginning in 2014, those who do not comply with the mandate must make a “[s]hared responsibility payment” to the Federal Government. §5000A(b)(1). The Act provides that this “penalty “will be paid to the Internal Revenue Service with an individual’s taxes, and “shall be assessed and collected in the same manner” as tax penalties. §§5000A(c), (g)(1).Another key provision of the Act is the Medicaid expansion. The current Medicaid program offers federal funding to States to assist pregnant women, children, needy families, the blind, the elderly, and the disabled in obtaining medical care. 42 U. S. C. §1396d(a). The Affordable Care Act expands the scope of the Medicaid program and increases the number of individuals the States must cover. For example, the Act requires state programs to provide Medicaid coverage by 2014 to adults with incomes up to 133 percent of the federal poverty level, whereas many States now cover adults with children only if their income is considerably lower, and do not cover childless adults at all. §1396a(a)(10)(A)(i)(VIII). The Act increases federal funding tocover the States’ costs in expanding Medicaid coverage. §1396d(y)(1). But if a State does not comply with the Act’s new coverage requirements, it may lose not only the federal funding for those requirements, but all of its federal Medicaid funds. §1396c.
Twenty-six States, several individuals, and the National Federation of Independent Business brought suit in Federal District Court, challenging the constitutionality of the individual mandate and the Medicaid expansion. The Court of Appeals for the Eleventh Circuit upheld the Medicaid expansion as a valid exercise of Congress’s spending power, but concluded that Congress lacked authority to enact the individual mandate. Finding the mandate severable from the Act’s other provisions, the Eleventh Circuit left the rest of the Act intact.
I recently asked Worklaw® Network attorney Mike Ott to help one of our Members with regard to employers providing incentives to employees for “opting out” of health coverage. Under current law, in general it is OK to offer an incentive to employees that elect not to be covered by a health plan. However, a significant disincentive occurs with constructive receipt under IRS income tax rules. Basically, if you give cash in lieu of benefits, the IRS sees this as an option to all employees, not just the ones that elected coverage. So, suppose an employer gives a rebate of $50/month for an employee that opts out of coverage. The employee that opts out of coverage is paid 600/year. The $600 is treated as compensation and the employee has to pay income tax on the additional compensation and the employer and employee has to pay FICA tax on the additional compensation. That result is anticipated. However, the employees that elected health coverage are also required to pay tax on the benefit they could have received as cash. As such, the employer is responsible for imputing $600 of income to those employees, including deduction for taxes and the payment of the employer portion of FICA taxes on the imputed income. Failure to impute the income could result in the employer being liable for the entire tax obligation for all of the participating employees.
There is an alternative to the adverse tax consequences for current employees by using a 125/cafeteria plan and/or a flexible spending account model. In this case, the employer could provide excess flexible spending account dollars to all eligible employees (the employer can define who is eligible as long as it passes nondiscrimination testing). The employer would raise the employer provided cost of the medical premium by the amount of the anticipated incentive. For example, suppose the incentive is anticipated to be $50/month and the employer subsidizes coverage by $150/month for each employee. The employer could lower its subsidy to $100/month and provide an FSA account benefit of $600 to those electing coverage. The $600 can be used by the employee to pay toward health coverage, up to $50/month. The employees that elect coverage are effectively left in the same position. The employees that choose not elect coverage can use the $600 to pay for benefits on a tax free basis. Another option would simply be to lower the employer subsidy and raise all of the employees’ wages by the $50/month. Those that elect coverage would effectively get the $50 on a tax free basis by using it to pay for the employees share and those that don’t elect coverage get an additional $50/month in cash. In this case, the employer should treat the compensation differently and provide descriptive communication materials so that it gets recognized by the employees.
The IRS has now agreed that mandatory (i.e. opt-out) 125 plans are permissible. This makes the “perception” of providing an opt-out cash benefit much easier to communicate. Basically, under this scenario all employees can be mandated to participate in the health program and if they opt-out, they get a designated amount of cash. This can be accomplished by combining an opt-out health benefit plan with a mandatory participation in a flexible spending account plan. It’s always been permissible as an opt-in program, but the use of the mandatory FSA effectively forces the employee to recognize the benefit provided from the employer since the employee has to choose to receive the cash.
The imputed income issue generally is not a problem with the Medicare opt-outs, since in those cases, the employer generally is requiring that the participants provided the incentive or supplemental benefit also be covered by Medicare. Because all of the employees covered by Medicare get the benefit, there are no adverse tax consequences. Also, many employers provide the supplement as a reimbursement for health benefit only (e.g., payable for co-pays, deductibles or out-of-pocket costs for covered prescription drugs) and are not eligible to receive the benefit in the form of cash.
As far as Obama Care, it’s uncertain where we will end up at this time. We are awaiting a decision by the Supreme Court as to the constitutionality of the new law. At this time there is no consensus as to how the Supreme Court will rule. The last figures reviewed indicated that 55% of the practitioners surveyed though it would be repealed significantly (i.e. possibly eliminating mandatory coverage, which will effectively cause the entire statute to fail), and 45% felt that it would be substantially upheld. Personally, I’m in the minority and feel that it will be found constitutional. I have reviewed applicable case law, and although the Fed did a very poor job in presenting its case, I still believe it will be substantially upheld. However, again, we are really in a waiting mode now.