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A proposed “look-back” period could help alleviate the burden for employers when calculating potential penalties scheduled to take effect in 2014 under healthcare reform for firms that don’t offer healthcare insurance or whose insurance doesn’t meet specified qualifications. The American Staffing Association and others had pushed for such a look-back provision as the government begins the process of writing regulations to implement the federal healthcare reform law.
Last month, the IRS concluded a public comment period on a proposed look-back period.
Ed Lenz, senior vice president, legal and public affairs, at the ASA said the look-back period could provide substantial relief for staffing firms. However, the period put forward by the IRS was just an initial idea for discussion. The next step is a notice of proposed rulemaking, which will probably come out in late fall and include a 60-day public comment period, he said. A final rule could be issued next year.
The IRS proposal calls for “look-back” periods of between three months and 12 months to be set by the employer. A staffing firm could set a look-back period, and at the end of that period calculate which employees worked at least 30 hours per week (the threshold for full-time status).
A “stability” period would follow the look-back period. Any worker found to be a full-time worker during the look-back period would automatically be considered a full-time worker during the stability period, even if his or her hours fell below the 30-hour per week threshold, as long as they remained employees. The stability period would run at least six months, but not longer than the look-back period.
An example of how this would work: If an employer chooses a 12-month look-back period, an employee would have to work full-time for the full 12-month period to be considered full-time, according to the ASA. The employee would then be considered full-time for the stability period regardless of hours worked. Still, an employer could avoid a penalty if it offered a qualified healthcare plan at the end of the look-back period. If there were no healthcare plan — or one that didn’t qualify — and an employee received a subsidy to buy insurance, the employer could then face penalties.
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