[font=Calibri]Last week guidance was issued clarifying that waitingperiods for enrollment under the Affordable Care Act cannot exceed 90 days.[/font]
[font=Calibri]This guidance is not unexpected. The questions employershave needed answered are;[/font]
[font=Calibri]1.[/font][font=Times New Roman]
[/font][font=Calibri]What if it cannot be determined at the time ofhire if the employee will work enough hours to qualify for employee benefits? [/font]
[font=Calibri]2.[/font][font=Times New Roman]
[/font][font=Calibri]And if it is later determined the employee didqualify and enrolls in the group plan, will the employer be considered out of compliance if that period is over 90 days?[/font]
[font=Calibri]The guidance gives employers a method to determine if anemployee qualifies. This is how the qualification analysis can work to keep the employer in compliance. [/font]
[font=Calibri]1.[/font][font=Times New Roman]
[/font][font=Calibri]If the employer cannot “reasonably determine” atthe time of hire if an employee will qualify for enrollment then they can deny enrollment. Remember the ACA states that employees who work 30 hours per week are considered full time.[/font]
[font=Calibri]2.[/font][font=Times New Roman]
[/font][font=Calibri]The employer can use a 12 month “look back” evaluationperiod to determine if the employee meets the criteria to be enrolled in the plan.[/font]
[font=Calibri]3.[/font][font=Times New Roman]
[/font][font=Calibri]If the employee qualifies during the qualificationperiod, they must have the opportunity to enroll no later than the 13thmonth measured from the first day of the month following their hire date.[/font]
[font=Calibri]Large employers should be cautious about the interpretationof “reasonably determine” with application of the 90 day waiting period. Consistency will necessary to defend any decisions should an employee complain to the department they were denied the right to enroll and the employer could have known they would qualify. [/font]
[font=Calibri]This guidance also highlights that all “part time” employeesare in a continual “evaluation period”. Employers will have to monitor variable hour employees on a constant basis with the 12 month look back rule to see the employee is qualified to enroll. If they qualify they will have to be allowed on the plan for one year. During that year the employer will continue to measure and may deny enrollment the second year if they do not meet the 30 hour per week threshold. [/font]
[font=Calibri]I addition employers will need to coordinate with theinsurance carrier regarding enrollment for those that were no enrolled within 90 days of their hire date. It is anticipated that carriers will have a process to identify those who are in their evaluation period. [/font]
[font=Calibri]If you would like to read the guidance you can find thedocument at [/font][font=Calibri]http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=26730&AgencyId=8&DocumentType=1[/font][font=Calibri].
[/font]
[font=Calibri]If you have any questions please contact [/font][font=Calibri]gary@illuminaregroupinc.com[/font][font=Calibri].[/font]
[font=Calibri]IRS CIRCULAR 230 — DISCLOSURE NOTICE: IRS Circular 230regulates written communications
about federal tax matters between tax advisors and their clients. To the extent the preceding correspondence and/or any attachment is a written tax advice communication, it is not a full “covered opinion”. Accordingly, this advice is not intended and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS regarding the transaction or matters discussed herein.[/font]
