WASHINGTON, D.C. | December 18, 2012
Dear Secretary Geithner, Secretary Solis, and Secretary Sebelius:
We write to request information concerning the administration’s implementation of the Patient Protection and Affordable Care Act (PPACA). Specifically, we request clarification concerning how an employer determines the average number of hours worked per week under PPACA.
Sections 1513 and 10106 of PPACA create new tax penalties, beginning in 2014, for employers with at least 50 full-time equivalent employees if one or more of their full-time employees (defined as those working more than 30 hours) obtains a premium credit through a health insurance exchange. However, the question of how employers determine whether their employees have worked an average of 30 hours per week, thereby putting the employer at risk of paying the tax penalties, remains.
In guidance issued by the Internal Revenue Service, a “look-back” period of up to 12 months is considered when determining whether an employee has worked an average of 30 hours per week. Given that the new tax penalties begin in 2014 and employers are able to use a “look-back” period of up to 12 months, the guidance seems to suggest employers should begin keeping track of their employees’ hours for the purpose of the new tax penalties as early as January 1, 2013. As employers make hiring decisions and determine their employees’ schedules for the first pay periods of 2013, it is critical they have maximum certainty and clarity concerning their obligations under the health care law.
To read the full letter, click here.
To read the response provided by the Treasury Department, click here.
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