Monday, April 1, 2013

Obamacare, full-time employees, IRS, Employer Shared Responsibility provisions, outsourcing jobs abroad

PATRICK ISHMAEL 4/1/2013:

Part of the Affordable Care Act requires that businesses who employ 50 or more full time workers provide a certain level of “affordable” health coverage to their employees. The IRS defines a “full time employee” as “an individual employed on average at least 30 hours per week.” 

7. Which employers are not subject to the Employer Shared Responsibility provisions?
Employers who employ fewer than 50 full-time employees (or the equivalent combination of full-time and part-time employees) are not subject to the Employer Shared Responsibility provisions. An employer with at least 50 full-time employees (or equivalents) will not be subject to an Employer Shared Responsibility payment if the employer offers affordable health coverage that provides a minimum level of coverage to its full-time employees.

Reach 50 full time equivalent employees without complying with the new coverage requirements and you may be in for some ACA-sanctioned penalties.
But when is a “full time employee” not a “full time employee”? According to the IRS, when the job is shipped abroad. That means that if you are a growing business approaching the 50 employee cap and you want to avoid both the health care costs and penalties imposed by this section of the health law, the ACA has given you a perverse way of doing it.

8. Are companies with employees working outside the United States subject to the Employer Shared Responsibility provisions?
For purposes of determining whether an employer meets the 50 full-time employee (or full-time employees and full-time employee equivalents) threshold, an employer generally will take into account only work performed in the United States. For example, if a foreign employer has a large workforce worldwide, but less than 50 full-time (or equivalent) employees in the United States, the foreign employer generally would not be subject to the Employer Shared Responsibility provisions.

9. Are companies that employ US citizens working abroad subject to the Employer Shared Responsibility provisions?
A company that employs U.S. citizens working abroad generally would be subject to the Employer Shared Responsibility provisions only if the company had at least 50 full-time employees (or the equivalent combination of full-time and part-time employees), determined by taking into account only work performed in the United States. Accordingly, employees working only abroad, whether or not U.S. citizens, generally will not be taken into account for purposes of determining whether an employer meets the 50 full-time employee (or equivalents) threshold. Furthermore, for employees working abroad the time spent working for the employer outside of the U.S. would not be taken into account for purposes of determining whether the employer owes an Employer Shared Responsibility payment or the amount of any such payment.