The federal government Aug. 31 issued two notices that provide employers
guidance on how to determine which workers are full-time employees who must be
offered coverage under the 2010 health care system overhaul and how their wages
can be calculated in determining whether coverage is affordable, as well as on
limitations on coverage eligibility waiting periods.
Internal Revenue Service Notice 2012-58 allows employers to rely on wages
reported on employees' W-2 forms to determine whether health care coverage is
affordable under the Affordable Care Act.
“At least through the end of 2014,” the notice said, “for all employees, an
employer will not be subject to an assessable payment under [tax code Section]
4980H(b) for an employee if the coverage offered to that employee was affordable
based on the employee's Form W-2 wages.”
Under ACA, workers who meet the law's definition of “full-time equivalent”
employees must be offered comprehensive, affordable coverage, or employers face
stiff penalties, called “shared responsibility” payments. The requirement
applies to employers with at least 50 full-time workers.
IRS has not yet ruled on how income will be defined to determine whether
coverage is affordable. ACA stipulates that coverage will be considered
affordable if the cost of a plan does not exceed 9.5 percent of the employee's
household income, Notice 2012-58 noted.
Consumer groups have called for the agency to ensure that household income is
used to determine whether family coverage is affordable.
Notice 2012-58, as well as Notice 2012-59, expanded options for employers to
determine whether employees must be considered full time.
Notice 2012-59, issued by IRS, as well as the departments of Labor (in
Technical Release 2012-02) and Health and Human Services, also contained
administrative guidance on an ACA requirement that waiting periods for group
health plans and group health insurance may not exceed 90 days.
Notice 2012-59, which also will remain in effect through 2014, gives
employers up to 13 months to determine whether an employee will be full time in
situations in which the employee was initially hired to work part time or for
Both notices are scheduled to be published in Internal Revenue Bulletin
2012-41, dated Oct. 9. Public comments can be submitted until Sept. 30.
By Sara Hansard
IRS notices 2012-58 and 2012-59, and DOL Technical Release 2012-02 are in the