NAIFA to IRS: Shared Responsibility Shouldn’t Harm Small Businesses
FALLS CHURCH, VA (June 21, 2011) —The National Association of Insurance and Financial Advisors has submitted comments asking the Internal Revenue Service and Treasury Department to ensure forthcoming regulations protect small business exemptions in the “shared responsibility” provision of the Patient Protection and Affordable Care Act.
The PPACA will require some employers that do not offer affordable health coverage to full-time employees to pay a “shared responsibility” fee beginning in 2014. The law specifically exempts small companies that employ fewer than 50 full-time employees working 30 or more hours per week.
The IRS and Treasury issued a notice seeking comments on how future regulations should define the “hours of service” that would determine who is a “full-time employee.” NAIFA’s comments encourage regulators to implement the law as simply, predictably, and sustainably as possible.
“This is important to NAIFA members because health insurance brokers and agents provide critical assistance and advice to their small-business clients, who often lack their own human resources or compliance departments,” said NAIFA President Terry K. Headley. “Our members help clients administer their employee health plans and make certain that those plans comply with the law. Also, many NAIFA members are small business owners in their own right.”
NAIFA’s comments specifically address several aspects of future “shared responsibility” rules and proposals in the IRS notice:
- IRS should not include extended leaves of absence during which employees receive reduced pay, such as disability leave, layoffs, and parental leave, in determining the hours of service. This could bring unintended consequences for small business owners and employees. For example, hiring workers to fill in for employees on extended leave could put employers over the 50 full-time-employee threshold and trigger shared responsibility fees. To avoid going over the limit, small businesses might choose to pay nothing at all to employees on extended leave who would have otherwise received partial pay.
- The regulation should provide broad definitions for the terms “seasonal worker” and “retail” to preserve as much as possible the summer labor market for students. If hiring students on summer break could trigger fees for employers, young people will be deprived of valuable work experience and income.
- Time periods and start dates for safe harbors and administrative procedures for determining the full-time or part-time status of employees should be standardized with existing IRS rules to ease the burden on small business owners.
As much as possible, regulations should avoid setting up multiple deadlines and various definitions for similar terms. The rules should be flexible enough to avoid doing harm to employment opportunities, such as summer work for students and flex schedules, NAIFA said.
“Small businesses often lack the resources to calculate the full-time status of their employees on a monthly basis,” Headley said. “They need to be able to abide by the law without hiring costly lawyers, accountants or consultants.”
About NAIFA: NAIFA comprises nearly 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The Association’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.