As reported in Health care reform: The implications of Supreme Court’s decision for employers, “the heart of the law requires that ‘large employers’ offer a medical plan that provides ‘minimum essential health benefits’ to their full-time employees or pay a tax effective Jan. 1, 2014.” So which employees are full-time employees?
The Patient Protection and Affordable Care Act provides that it is generally any employees who work 30 hours per week. Recently, the IRS issued a notice providing a safe harbor for determining full-time employees, Notice 2012-58 [pdf]. The notice creates a standard measurement period and an initial measurement period of 3-12 months. Generally, employers can utilize the hours worked during these periods to determine whether employees are full-time.
During an administrative period of no more than 90 days following the standard measurement period (for current employees) or initial measurement period (for new employees), employers can determine if the employee is eligible for coverage and enroll the employee. The notice provides a stability period that must be at least as long as the measurement period and could last 6-12 months. If the employer determines that the employee is a full-time employee, then the employer must provide coverage to the employee for the stability period (even if the employees’ hours fall below an average of 30 hours per week).
The IRS notes that “the goals of Notice 2012-58 are intended to encourage employers to continue providing and potentially to expand group health plan coverage for their employees by permitting employers to adopt reasonable procedures to determine which employees are full-time employees without becoming liable for a payment under section 4980H, to protect employees from unnecessary cost, confusion, and disruption of coverage, and to minimize administrative burdens on the affordable insurance exchanges.”