Much has been made about how the exchanges are playing in Peoria, but what about Portugal, Poland or Peru?
While attention clearly has been Stateside, eagle eyes in both HR and legal departments are expected to conduct due diligence beyond borders and not become complacent following a relaxation in the Affordable Care Acts timetable on phased in requirements and paying penalties.
This is the conclusion of a recent PricewaterhouseCoopers LLP issue brief examining the online marketplaces impact on globally mobile employees. The group of expatriates studied includes U.S. citizens working abroad at least 30 hours per week or foreign nationals on a long-term assignment in the U.S. who become residents for income tax purposes, as well as employees who frequently cross borders on business travel.
Despite the recent regulations delay and phase in of penalties that could give employers some breathing room, global employers shouldnt underestimate the efforts that will be required to implement required administrative and health plan changes necessary to comply, according to PwC.
For starters, multinationals will need to take an inventory of their full-time employees who are expected to maintain minimum essential coverage, which includes employer-sponsored plans, or pay a tax penalty upon filing their U.S. federal income tax return.
Questions may arise about individuals on shorter assignments or if theres uncertainty about meeting the MEC requirements at the beginning of an assignment, with PwC noting that expats must be working in their particular location for at least 330 full days during 12 consecutive months.
Failure to comply with the law could come at a steep price.
So-called applicable large employers with at least 50 full-time equivalent employees during the preceding calendar year would be penalized 1/12 of $2,000 multiplied by the number of those employees (less 30) for any month in which coverage isnt offered. The fine is 1/12 of $3,000 per month for each such employee if minimum value and affordability standards are not met and those employees then obtain subsidized coverage on a public exchange. The group includes those who are among the up to 5% of employees who were not offered coverage at all a percentage that will climb to 30% in 2015.
Although the federal government recently lowered the threshold for assessing penalties on employers that fail to offer coverage to at least 70% of full-time employees for 2015, the number is set to rise thereafter to 95% of employees and dependents other than spouses.
Other such relief is being provided. For example, a special transition rule exempts organizations with between 50 and 99 full-time equivalent employees from having to comply with the applicable large employers rule until 2016 if certain conditions are met. Another involves an extension until the end of 2016 for certain expat health plans to meet the ACA benefit mandates. Enrollees in these plans would be expected to live outside their home country for at least half the year.
One final note from PwC draws attention to the U.S. governments acknowledgement that expatriate health plans may face unique challenges in complying with certain aspects of the ACA. They might include additional regulatory approvals from foreign governments, as well as conflicts between domestic and foreign laws in some circumstances,
Bruce Shutan is a Los Angeles freelance writer.
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