ERIC Recommends Revisions to Shared Responsibility Proposed Regulations

For Immediate Release

Washington, DC – The ERISA Industry Committee (ERIC) filed comments today urging the Treasury Department and Internal Revenue Service (the Agencies) to revise the shared responsibility proposed regulations to better accommodate the implementation challenges and administrative complexities faced by large, multinational companies with diverse workforces.

The proposed regulations detail the circumstances under which penalties can be imposed on large employers for failing to offer health coverage to at least 95% of its full-time employees (and their dependents) or for large companies that offer health coverage, if it is not affordable and/or does not satisfy the requirements for minimum essential coverage.

In particular, ERIC emphasizes that members of a controlled group should not be required to aggregate the hours of service that workers provide for more than one member of the controlled group.  ERIC explained that it would be incredibly costly for large companies to create complex systems to track the hours worked and coordinate many different measurement and stability periods for multiple controlled group members on a monthly basis.

ERIC also recommends the Agencies clarify that the proposed regulations would not apply once an employee has left employment.  Workers frequently terminate employment, have unpaid leaves of absence, or are furloughed. Companies should not be required to count hours for individuals who are not working for the employer.

The Agencies are also encouraged to clarify that the lookback periods used to determine whether a worker is a full-time employee should only apply to individuals who do not work on a fixed schedule, that is, “variable hour employees.”  When the company reasonably expects the individual to work a full-time or part-time schedule, the lookback period rules should not apply.

Additionally, ERIC urges the Agencies to modify the rules so that large companies are not required to cover employees’ dependents in order to avoid penalties.  Companies could simply pass through the cost of covering dependents – which would result in greater work and expense for employers and cause many dependents to be ineligible for a premium tax credit or other financial insurance for coverage through a state exchange.  If the Agencies will not remove the dependent requirement, ERIC recommends that they at least narrow the definition of dependent to exclude foster children and any other children that cannot be claimed on the employee’s federal tax return.

ERIC further recommends that the Agencies clarify that dependents do not have an independent right to elect coverage.  An offer of appropriate coverage to an employee should satisfy the employer’s obligation to offer coverage to the worker’s dependents.

The Agencies were also encouraged to provide that companies can take wellness programs into account when determining affordability. The Agencies have recognized the value of wellness programs to both employees and employers.  ERIC urged them to allow large employers to have the option to assume that all employees have earned any wellness incentives that are available to them when calculating the affordability of the group health plan.

ERIC’s letter can be accessed by clicking on the link below:

ERIC Comment Letter on Shared Responsibility


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About The ERISA Industry Committee
ERIC is a national advocacy organization that exclusively represents large employers that provide health, retirement, paid leave, and other benefits to their nationwide workforces. With member companies that are leaders in every sector of the economy, ERIC advocates on the federal, state, and local levels for policies that promote flexibility and uniformity in the administration of their employee benefit plans.