New Law Changes ACA Employee Count for Some Employers

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 recently signed by the President doesn’t sound like a law that affects the ACA. Surprise!

This new law amends the section of PPACA that addresses the definition of applicable large employer (Section 4980H(c)(2)).

This provision allows employers to calculate whether they meet the employer shared responsibility requirements as an “applicable large employer” (ALE) by excluding employees enrolled in TRICARE or veteran’s coverage. Of note, employers can recalculate their current status as the effective date of this subsection applies as of January 1, 2014.

http://www.successtaxrelief.com/
http://www.successtaxrelief.com/

A review of IRS documents regarding plans that constitute MEC coverage suggests that not all Tricare or veteran’s coverage may qualify for this counting exception. More guidance will be necessary to understand which programs qualify.

Employers may want to survey whether any employees are covered by these programs. To the extent that an employer’s ALE status may change due to employees covered by these programs, legal advice may be appropriate.

Of note, this new law only affects how an employer counts employees to determine ALE status. These employees are not otherwise excluded from the employer shared responsibility requirements.

Here is the text of the law relating to this change:

SEC. 4007. Amendments to Internal Revenue Code with respect to health coverage of veterans.

(a) Exemption in determination of employer health insurance mandate.—

(1) IN GENERAL.—Section 4980H(c)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following:

“(F) EXEMPTION FOR HEALTH COVERAGE UNDER TRICARE OR THE VETERANS ADMINISTRATION.—Solely for purposes of determining whether an employer is an applicable large employer under this paragraph for any month, an individual shall not be taken into account as an employee for such month if such individual has medical coverage for such month under—

“(i) chapter 55 of title 10, United States Code, including coverage under the TRICARE program, or

“(ii) under a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary.”.

(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to months beginning after December 31, 2013.