Steps employers should be taking now

| October 4, 2012 | Articles

Since 2010, when the Patient Protection & Affordable Care Act was passed, a gazillion news stories, articles and seminars have talked about what the act means and requires.

For a time, many of us thought some or the entire act would be struck down by the U.S. Supreme Court. Then, after the high court issued its opinion in June, we were forced to realize that this giant compliance burden is here to stay. So, now what?

One of the many issues that everyone has been talking about is whether employers should play or pay – that is continue to offer health coverage to all full-time employees or get out of health care altogether and instead pay the $2,000-per-employee penalty.

It is certainly tempting to say to heck with this, and just pay the penalty. But it seems more likely that most employers will play and continue to offer health coverage – not just to avoid the penalty, but also because employees have come to expect the benefit.

If you are an employer who has decided to play, you need to be proactive now – not next month, not next year – to make sure you will, in fact, offer coverage to all of your full-time employees in 2014, when the penalty kicks in.

First, a full-time employee is an employee who is employed on average at least 30 hours per week. About a month ago, the IRS issued guidance to help employers determine who is a full-time employee. The guidance is detailed, but in general the hours that an employee works in 2013 will determine whether they are a full-time employee in 2014. Now, you need to make sure you are properly structuring your employee hours and classifications so that you are ready for 2014.

Second, many employers have long classified individuals as independent contractors who may, in fact, be employees. Now especially, you need to look at your independent contractors and make sure that they are, in fact, independent contractors. If you have even one so-called independent contractor who is really a full-time employee, and who is later reclassified by the IRS as an employee, you could be hit with the potentially massive penalty if the individual enrolls in subsidized coverage through the exchange.

There are plenty of other issues that employers need to be looking at – now – but these two are a good start.

This article appeared in the October 4, 2012, issue of The Journal Record. It is reproduced with permission from the publisher.
© The Journal Record Publishing Co.


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Brandon Long

About the author

Brandon Long is an experienced, AV Preeminent-rated employee benefits attorney with the McAfee & Taft law firm. He concentrates his practice on qualified retirement plans, health and welfare plans, and executive compensation. He has represented a broad range of clients, including Fortune 500 companies, publicly traded and closely held businesses, middle-market companies, corporate trustees, hospitals, healthcare providers, partnerships, cities, universities and Indian tribes. He currently serves as leader of the firm’s Employee Benefits and Executive Compensation Group, overseeing one of the Southwest’s largest and most experienced teams of employee benefits lawyers.

Brandon’s practice is focused on matters involving 401(k) plans, defined benefit plans and employee stock ownership plans; audits and investigations by the IRS and the U.S. Department of Labor; mergers and acquisitions involving ERISA plans; retirement plans for tax-exempt and governmental entities, including Indian tribes; health and welfare issues, including health care reform; and executive compensation issues arising under Code Section 409A. He has particular experience fixing broken retirement plans and has filed and successfully resolved numerous voluntary correction applications with the IRS.

Since the passage of the Patient Protection and Affordable Care Act (health care reform), Brandon has counseled clients of all sizes on the interpretation and implementation of key deadlines and measures, including “pay or play,” health insurance exchange issues, changes to flexible spending accounts, W-2 reporting, automatic enrollment, discrimination testing, and waiting periods. He also helps clients analyze and implement cost-containment strategies.

Brandon’s clients seek his advice for practical, creative solutions to complex problems, and the ability to make highly technical concepts understandable to executives, employees and other lawyers. A portion of his practice has been devoted to complex litigation, including ERISA litigation. In 2007, on behalf of a major insurance company, Brandon co-authored the petition for a writ of certiorari that was granted by the U.S. Supreme Court, and he helped prepare for and attended the oral argument in the Supreme Court, which issued an opinion in his client’s favor.

Prior to returning to his hometown and joining McAfee & Taft, Brandon practiced with large national and international law firms in Dallas and in Washington, D.C.