IRS Seeks Additional Guidance on Application of ACA Employer Mandate to Multiemployer Health Plans

Beginning in 2014, some large employers will be subject to fines under the Affordable Care Act (“ACA”) if they do not provide health care to their workers – the “pay or play” provision of the Act.  The IRS has proposed detailed rules governing what employers will be subject to this mandate, which workers are covered, and what health plans will satisfy the requirement. These proposed rules, however, are focused on single-employer health plans. The IRS has asked for additional comments, and offered transitional rules, specific to multiemployer plans.

The IRS issued a transition rule that applies only to 2014. For employers that contribute to multiemployer plans, there will be no penalty in 2014 if: (1) the employer is required to make contributions to a multiemployer plan pursuant to a collective bargaining agreement or participation agreement for full-time employees; (2) the plan offers coverage to full-time employees and their dependents; and (3) the coverage is affordable and provides minimum value.  Additionally,  the plan must comply with the ACA’s requirement that waiting periods for eligibility be less than 90 days.

The waiting period limitation and full-time status determinations may be particularly troubling for multiemployer plans. Unlike single-employer plans, which have direct access to information about the employees, many multiemployer plans are required to use employer reports that may not be submitted until weeks after the hours are worked. Unless plans institute automatic enrollment with the ability to opt-out, they could face delays in determining whether particular workers should be treated as full-time.

The IRS is accepting comments on these proposed rules until at least March 18, 2013. Comments may be submitted online, at http://www.regulations.gov/#!documentDetail;D=IRS-2013-0001-0001.

For more information about the impact of ACA on multiemployer plans, please contact your Trust Fund counsel.

By Daniel S. Brome

Legal Developments