The Internal Revenue Service (IRS) has released guidance on the penalties employers face for failing to provide workers with health coverage under the Patient Protection and Affordable Care Act (PPACA).
In response to the requirements of the PPACA, some expressed concerns that employers would cut workers hours to less than 30 so that they would not qualify for full-time status. Some may be doing this, although some analysts have reported signs that such an approach might have unintended negative consequences for productivity, according to Bloomberg BNA. It might also force employers to hire more workers for the same amount of work.
The IRS-provided guidance indicates that the penalties associated with lack of employee benefit healthcare coverage apply to employers who provide no coverage or whose benefit plans do not meet minimum standards. This is only true for large employers, which the PPACA distinguishes as those with at least 50 workers who work an average of 30 hours or more per week. Because employers can limit the hours of their workers artificially, this may give them a great deal of control over whether the penalties apply to them.
On the other hand, cutting employees' hours too far could convince them to leave in search of a more productive job, or even force them to do so depending on their financial needs. Similarly, choosing not to offer benefits could place some employers at a disadvantage when it comes to talent recruitment and retention. It remains to be seen how significant the impact of these factors will be on employers' choices.
Adapting to the PPACA
The nature of the new requirements is such that employers with more complex workforce structures and employment arrangements may find adapting more of a challenge. Large employers with benefit packages that meet the required standards may not have to do much to comply with the PPACA, the news source notes. If their plans are not up to the minimum standards, that might require some adjustment to the benefits themselves but no other administrative or HR changes.
All organizations should analyze their employee benefit plan administration and design to consider how they will be affected and what changes they might wish to make. Employee benefit consulting services could be helpful in coping with and adapting to the PPACA and any other changes that are made.
