It's Official – Employers Have 90 Days to Provide New Hires With Health Insurance

10 March 2014 Labor & Employment Law Perspectives Blog

In December 2012, we reminded you that proposed regulations under the Patient Protection and Affordable Care Act (ACA) – colloquially known as “Obamacare” – sought to impose strict requirements on employers and issue penalties for noncompliance. Those regulations just lost their “proposed” character. Last week, the Obama Administration published a final rule under the ACA requiring employers to provide health insurance to new full-time employees within their first ninety days of employment.

The proposed regulations mandated that the employers subject to the ACA are those who have at least 50 full time employees. However, the regulations defined full time employees as those who work, or are expected to work, at least 30 hours per week. Additionally, in order to prevent employers from exempting themselves from the ACA by hiring only part-time employees, the proposed regulations stated that part-time employees’ hours count towards determining whether the 50 full time employee threshold is satisfied. For example, if six part-time employees work 20 hours per week, they will be treated as four full-time employees for ACA coverage purposes. Additionally, and deviating from common state and federal definitions, the IRS’s regulations clarified that “hours of work” include all paid hours during which no duties are performed due to vacation, jury duty, voting time, and even military duty and leaves of absence.
As we explained in January 2013, the regulations proposed a $2,000-per-employee penalty for an employer’s failure to provide health insurance.

The proposals have now become final rules with only slight modifications, such as the following examples. First, employers can still require new hires to complete up to 1,200 hours of work before becoming eligible for health insurance, but any such employer-imposed eligibility conditions cannot preclude a new hire from going uncovered for a period of more than employee’s first 90 days of employment. Second, the proposed regulations made both the employer and the employer’s health insurer liable if an employee did not receive health insurance by the close of the 90-day window. Following arguments against this provision by health insurance companies that it would require them to policy their employer policyholders, the final rule now does not hold insurance companies liable if they lack “specific knowledge” of an employer’s intent to avoid compliance with the 90 day rule. And in a third variance for the earlier proposed regulations, employers can permit employees to obtain their own health insurance through options outside their employer, so long as the employer complies with established notice requirements. The Department of Labor has published guidance regarding this notice requirement.

Although these regulations have not become final, it nevertheless remains important to remember that they will not be implemented until 2015. Employers are therefore encouraged to consult with their counsel and tax advisors to ensure that their employment policies are compliant and their business plans are financially equipped to handle the requirements of the ACA.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services

Insights

Bad Holiday Season News! Estimates of an increase of Cyberattacks 20%!
13 December 2019
Internet, IT & e-Discovery Blog
Driving the Future of Automotive Technology
12 December 2019
Manufacturing Industry Advisor
Massachusetts Governor Proposes Facility Fee Ban
12 December 2019
Health Care Law Today
American Rule Prevails; PTO May Not Collect In-House Attorneys' Fees as "Expenses"
12 December 2019
IP Litigation Current
ACCC 46th Annual Meeting & Cancer Center Business Summit
04-05 March 2020
Washington, D.C.
Foley/Deloitte Compliance and Privacy Officer Roundtable
27 February 2020
Boston, MA
Let’s Talk Compliance
24 January 2020
Orlando, FL
New England Alliance Annual Meeting
15-17 January 2020
Woodstock, VT