Pay or Play Rules—IRS Proposes Approach for Measurement Period Changes

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Pay or Play Rules—IRS Proposes Approach for Measurement Period Changes

Pay or Play Rules—IRS Proposes Approach for Measurement Period Changes

Posted by on Nov 10, 2014 in Blog News

With so many new rules and regulations surrounding the Affordable Care Act, many individuals have been left confused and perplexed. In order to clear up any misunderstandings regarding the Pay or Play rule, the IRS is proposing measurement period changes. The Pay or Play rule states that applicable large employers (ALEs) are required to offer minimum value health coverage to all of their full-time employees at an affordable rate, or they will be faced with a penalty. In order to account for employers who need time calculating their full-time employee status, the look-back measurement method was put in place.

Since the measurement period for a particular employee can change, the Internal Revenue Service (IRS) has proposed an alternative approach for applying the look-back measurement method through Notice 2014-49. This notice would mean that the look-back measurement method would apply to the following employee change situations:

  • If an employee transfers to a different position within the same applicable large employer where a different measurement period is applied.
  • If the applicable large employer decides to change the measurement period for a category of employees. These categories include non-collectively bargained employees, collectively bargained employees, salaried employees, hourly employees, and employees who are employed in different states.
  • If an employee began in the first position in the lock-back measurement method and was transferred to a second position for the same applicable large employer where a different measurement method is employed.

We understand the complexities surrounding all the implications through the Affordable Care Act and we urge you to give us a call if you have any remaining questions surrounding the Pay or Play Rule. Serving Goleta, Santa Barbara, and surrounding cities, contact Brown & Brown Insurance Services of California, Inc., for all of your insurance needs.