The Internal Revenue Service answered frequently asked questions related to automatic enrollment, employer shared responsibility payments, and waiting periods under the Affordable Care Act (ACA).  The notice addressed employers’ questions and invited comments on proposals that the Treasury, Labor, and Health and Human Services departments expect to include in future guidance or rulemaking under the ACA.

The notice included the following information:

• Guidance on automatic enrollment will not be ready by 2014.  Until final regulations under FLSA section 18A are issued and become applicable, employers are not required to comply with FLSA section 18A.

• Treasury and the IRS intend to issue proposed regulations or other guidance permitting employers to use an employee’s Form W-2 wages as a safe harbor in determining the affordability of employer coverage.

• IRS and Treasury intend to propose a regulation or other guidance on employer shared responsibility payments under tax code Section 4980H that will clarify how the employer shared responsibility provisions will be coordinated with a 90-day waiting period limitation under Section 2708 of the Public Health Service Act.

• Treasury and the IRS intend to issue proposed regulations or other guidance that would allow employers to use a “look-back/stability period safe harbor” method for purposes of determining whether an employee (other than a newly-hired employee) is a full-time employee.

• Anticipated IRS and Treasury guidance under Section 4980H would give employers, in certain circumstances, six months to determine whether a newly hired employee is a full-time employee.  During that period, the employer would would be exempt from a Section 4980H penalty payment for that employee. The time that an employer would have to determine whether a newly hired employee is a full–time employee would depend on whether the employee is reasonably expected, when hired, to work an average of 30 or more hours per week on an annual basis and whether, at the end of that employee’s first three months of employment, the hours worked reflect the average number of hours the employee would be expected to work annually.

• Employers would not be required to cover part-time employees or any other category of employees when Section 2708 of the Public Health Service Act, which imposes a 90-day limitation on waiting periods, becomes effective in 2014. Under the ACA, small employers will not be penalized for choosing not to offer coverage to any employee, and large employers will not be penalized for choosing to limit their offer of coverage to full-time employees.

• The departments intend to retain the definition of “waiting period” in Section 2708 of the Public Health Service Act, which defines a 90-day waiting period as beginning when an employee is otherwise eligible for coverage under an employer’s group health plan. Additional conditions for eligibility would generally be permissible under anticipated guidance unless the conditions were designed to avoid compliance with the 90-day waiting period limitation. Eligibility conditions such as full-time status, a bona fide job category, or receipt of a license would be permissible.