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Do Contributions to Multiemployer Plans Satisfy Employer Obligations under PPACA?

Addressing an issue that has befuddled multiemployer plans since the Patient Protection and Affordable Care Act (PPACA) became law more than three years ago, the U.S. Treasury published a proposed rule in January regarding PPACA’s shared responsibility penalty.

Under the law, large employers (those with more than 50 full time equivalent employees) will be penalized if they fail to offer qualifying health care insurance to employees.

The question for LIUNA health and welfare funds – and, in particular, for signatory employers who make contributions to a plan under a collective bargaining agreement – is whether contributions to a multiemployer plan can satisfy the requirement of employers to provide insurance under PPACA. Though it might seem obvious that such contributions should alleviate this responsibility, the failure of the law and its early regulations to address the issue raised uncertainty within the union sector.

The proposed rule clarifies the matter. A large employer will not be penalized if these three conditions are met:

  • The employer is required to contribute to a multiemployer plan pursuant to a collective bargaining agreement or participant agreement;
  • Coverage is offered to full-time employees and their children; and
  • Coverage is affordable and provides minimum value.

While most LIUNA health and welfare plans offer coverage that is affordable and provides at least minimum value, plans may want to provide employers with certification that this is, in fact, the case. The new rule is transitional, intended to guide multiemployer plans through 2014. Additional guidance is expected.

The Treasury Department is accepting comments on the rule through March 18, and a public hearing will take place on April 23, 2013. The Internal Revenue Service has published a Questions and Answers webpage on the new rule.

The LHSFNA’s Health Promotion Division maintains a Health Care Reform Updates page that tracks new PPACA regulations.

[Steve Clark]

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