Tool Provides Estimates Only

The Taxpayer Advocate Service—an independent organization within the Internal Revenue Service (IRS)—has developed an Employer Shared Responsibility Provision Estimator tool to assist employers in understanding how the Affordable Care Act’s employer shared responsibility (“pay or play”) provisions work and how the provisions may apply to them.

Employers can use the tool to determine their:

• Number of full-time employees, including full-time equivalent employees (FTEs);
• Applicable large employer (ALE) status; and
• Estimated maximum amount of potential liability for the employer shared responsibility payment (“pay or play” penalty payment).

The tool provides estimates only. As a result, employers are advised to use it only as a guide to assist in making decisions regarding their tax situation.

Model Notices Previously Expired on June 30, 2018

The U.S. Department of Labor’s Wage and Hour Division (WHD) has extended the effective date of the following model FMLA notices through July 31, 2018:

• Notice of Eligibility and Rights & Responsibilities
• FMLA Designation Notice
• Certification of Employee’s Serious Health Condition
• Certification of Family Member’s Serious Health Condition
• Certification of Qualifying Exigency for Military Family Leave
• Certification of Serious Injury or Illness of a Current Servicemember for Military Family Leave
• Certification of Serious Injury or Illness of a Veteran for Military Caregiver Leave

Previously, these model notices expired on June 30, 2018. No other changes have been made to these notices besides their effective date.

For further guidance regarding these notices, please contact the WHD directly at 1-866-487-2365.

Law Requires Employer Contributions

Massachusetts has adopted a paid family and medical leave program, which will be funded by a payroll tax that becomes effective July 1, 2019. Employees can begin taking paid family and medical leave under the program in 2021. A summary of the program is below.

Additional requirements and exceptions apply. Click here to read the law.

Percentage Up from 2018

Under the employer shared responsibility (“pay or play”) provisions of the Affordable Care Act, applicable large employers—generally those who had 50 or more full-time employees (including full-time equivalent employees)—may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees and their dependents. For plan years beginning in 2019, the Internal Revenue Service has announced that coverage will generally be considered affordable if the employee’s required contribution for the lowest cost self-only health plan offered is 9.86% or less of his or her household income for the taxable year. For plan years beginning in 2018, the applicable percentage is 9.56%.

Given that employers are unlikely to know an employee’s household income, they may use a number of safe harbors to determine affordability, including reliance on Form W-2 wages.

Rule Permits Associations Based on Industry or Geography

The U.S. Department of Labor (DOL) has issued a new rule that allows employers to join together as a single group to offer group health insurance coverage to employees, working owners (including those without other employees), and their spouses and dependents as part of an “association health plan.” The rule allows association health plans to be formed on the basis of industry or geography, such as by state, city, county, or multi-state metropolitan area.

The new rule subjects association health plans to the nondiscrimination rules currently applicable to large group coverage under the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA). These rules prohibit discrimination based on a health factor or within groups of similarly situated individuals, but do generally permit plans to impose different eligibility provisions and costs based on bonafide employment-based classifications, such as full-time versus part-time status.