How Hiring Holiday Help Impacts ‘Pay or Play’ Compliance

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Employers that hire seasonal workers this holiday season are reminded that there is an exception when measuring workforce size to determine whether they are an applicable large employer (ALE) subject to the Affordable Care Act’s employer shared responsibility (“pay or play”) and corresponding information reporting provisions.

Seasonal Worker Exception

If an employer’s workforce exceeds 50 full-time employees (including full-time equivalent employees) for 120 days or less (or 4 calendar months) during the preceding calendar year, and the employees in excess of 50 who were employed during that period were seasonal workers, the employer is not considered an ALE for the current calendar year. A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis (e.g., retail workers employed exclusively during holiday seasons are seasonal workers).

Seasonal Worker Versus Seasonal Employee

While the terms “seasonal worker” and “seasonal employee” are both used in the pay or play provisions, only the term “seasonal worker” is relevant for determining whether an employer is considered an ALE. For this purpose, employers may apply a reasonable, good faith interpretation of the term “seasonal worker.” For more information on the difference between a seasonal worker and a seasonal employee under pay or play, please refer to IRS Pay or Play Q&A #26.

Click here for additional “Pay or Play” details

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    The IRS has released guidance further clarifying the rules regulating qualified small employer health reimbursement arrangements (QSEHRAs). QSEHRAs—which are health reimbursement arrangements exempt from the Affordable Care Act’s market reforms—may be offered by employers with fewer than 50 full-time equivalent employees that do not offer a group health plan to any of its employees to reimburse employees for medical expenses, including individual health insurance policy premiums.

    Guidance Highlights

    Highlights of the guidance are as follows:

    Click here for more information on QSEHRAs

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    The federal Occupational Safety and Health Administration (OSHA) has finalized December 15, 2017 as the date by which certain employers are required to electronically submit data from their 2016 Forms 300A to OSHA.

    Who Must Comply?

    By December 15, 2017, the following establishments—if currently required to comply with OSHA’s recordkeeping requirements—are required to electronically submit data from their 2016 Forms 300A to OSHA:

    However, according to OSHA, establishments in California, Maryland, Minnesota, South Carolina, Utah, Washington, and Wyoming are not yet required to submit data. Establishments located in these and other OSHA “State Plan” states should check with their states for the latest requirements.

    Where Do I Submit the Data?

    Covered establishments must submit the required data through OSHA’s online Injury Tracking Application.

    Have more questions? Contact Us!

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    The IRS has announced that it will begin mailing employers letters informing them of their potential liability for a “pay or play” penalty for the 2015 calendar year in late 2017. However, before any penalty is assessed and notice and demand for payment is made, employers will have an opportunity to respond to the agency.

    What Will the Letter Contain?

    The IRS plans to issue Letter 226J to applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent employees, on average during the prior year—if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees was enrolled in a qualified health plan for which a premium tax credit was allowed (and the ALE did not qualify for an affordability safe harbor or other relief for the employee). Letter 226J will include, among other things:

    The response to Letter 226J will be due by the response date shown on the letter, which generally will be 30 days from the date of Letter 226J. Letter 226J will also contain the name and contact information of a specific IRS employee that the ALE should contact if the ALE has questions about the letter.

    How Does an ALE Make a Pay or Play Penalty Payment?

    If, after correspondence between the ALE and the IRS, the IRS determines that an ALE is liable for a penalty payment, the IRS will assess the payment and issue a notice and demand for payment, Notice CP 220J. That notice will instruct the ALE on how to make a payment, if any. Notably, an ALE will not be required to include a payment on any tax return that it files or make a payment before notice and demand for payment.

    Click here for more information about the IRS and Pay of Play Compliance

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