Academic journal article Journal of Accountancy

Identifying Full-Time Employees Who Change Jobs within an Employer Group

Academic journal article Journal of Accountancy

Identifying Full-Time Employees Who Change Jobs within an Employer Group

Article excerpt

The IRS recently issued guidance under the Patient Protection and Affordable Care Act, EL. 111-148, on how to measure the lookback period for an employee under the lookback measurement method when the measurement period applicable to the employee changes. The lookback measurement method is used to determine whether an employee is a full-time employee for purposes of the large-employer health coverage shared-responsibility penalty under Sec. 4980H. A change in the measurement period might occur when an employee transfers within the same applicable large employer (ALE) from a position to which one measurement period applies to a position to which a different measurement period applies. It may also occur if the ALE member modifies the measurement method applicable to employees within a permissible employee category (e.g., hourly employees). Notice 2014-49 contains a proposed approach for the application of the lookback measurement method in these situations.

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Under Sec. 4980H, an applicable large employer is subject to a penalty if its employer-sponsored health coverage does not provide "minimum essential coverage" or is unaffordable relative to the employee's household income and at least one full-time employee has been certified as having enrolled in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee. An employer is an "applicable large employer" for a calendar year if, during the preceding calendar year, it employed on average at least 50 full-time employees. …

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