What's new in healthcare reform? We sought advice from Fisher & Phillips partner Sheldon J. Blumling, a benefits expert in the firm's Irvine, California, office. "The Internal Revenue Service recently issued two new notices regarding changes that will happen on January 1, 2014," he said.

How many employees do you have? Officially, says Blumling, these notices are "subregulatory guidance"—not quite as strong as new regulations but a good indication of what regulations are likely to be. The first deals with how employers should count their full-time employees. Remember that in order to be forced to "play or pay"—either provide healthcare coverage or pay penalties for failing to do so—an organization must employ at least 50 and full-time-equivalents (FTEs). So, how do you count employees, especially if their hours are variable?

Think of seasonal businesses and/or call centers with high turnover—for example, a retailer that hires people to work 45 hours a week for the holiday season but less than 30 a week after that. Such a worker could be seen as part-time. Organizations going into 2014 can do this: Count all full-time employees and divide the total of part-time employees' hours by 30 hours to get the number of FTEs: If, on average business days during 2013, it's 50 or more, play or pay kicks in. Once this happens, an employer then needs to determine the full-time employees for which it has play or pay obligations.

The original Affordable Care Act (ACA) said employers would need to determine this every month—surely an onerous administrative burden for any organization, particularly one with a lot of variable hour employees. But the IRS notice provides a safe harbor, termed a "stability period": Within certain parameters, employers may be able to average a part-time employee's hours from day of hire to the next insurance renewal date, and cover those eligible through the next plan year. Or, employers can recalculate for shorter periods, such as quarterly or every 6 months.

Blumling cautions employers to remember that if they offer coverage, their covered employees cannot seek subsidized coverage through a state exchange. If the employer doesn't offer coverage, or determines that some part-time employees are not eligible, note, too, it may have to allow the state exchange to double-check its hourly calculations. A final caution: Employees, state exchanges, or others may argue with an employer's determinations of who is and is not full-time. So, says Blumling, “Keep your ERISA fiduciary hat on and maintain good records of your decisions.”

The other notice is simpler. IRS Notice 2012-59 is less complex than Notice 2012-58, which we've just discussed. This one focuses on the 90-day waiting period—a healthcare reform limit on how long employers can keep employees waiting after they've been hired before covering them. That provision covers both employees and eligible dependents and also takes effect on January 1, 2014.

A closer look

Blumling notes that observers have said that employers face daunting administrative and other cost burdens to comply with the ACA, but he feels the latest two IRS notices help to make things easier for employers.

Let's review some basics about the ACA. Beginning in 2014, employers with at least 50 full-time-equivalent (FTE) employees must offer all of them "minimum essential coverage" in an "eligible employer-sponsored healthcare plan." If the employer fails to do so, it may be assessed a monthly penalty of $166.67 per eligible employee, excluding the first 30 workers.

There's another prong affecting employers: In a case where an employer offers a plan that is "unaffordable" or lacks "minimum value" for any full-time employees who qualify for a premium tax credit or cost-sharing reduction, the employer would be assessed a monthly penalty of up to $250 times the number of full-time workers who qualify for financial assistance—except that the penalty is capped at the amount that would be assessed if the employer offered no coverage.

Now, how do employers determine which employees are eligible for financial assistance? The original ACA states that coverage is seen as unaffordable if the employee's premium exceeds 9.5 percent of his or her household income. Employers immediately began to wonder how they could determine that household income, and the IRS proposed during 2011 that employers could instead refer to Box 1 of an employee's Form W-2 to determine his or her income. And that proposal, which is now called the "affordability safe harbor," became part of Notice 2012-58, the same notice that discusses how to determine an employer's total FTEs.

So how are employers planning for 2014? Two recent surveys give us some insight. The first was conducted by financial consulting firm Deloitte, which found that only 9 percent of companies, representing about 3 percent of the workforce, said they plan to drop healthcare coverage in between 1 and 3 years. Significant, however, is the fact that those respondents were virtually all among the smallest survey respondents, with between 50 and 100 employees. Another 13 percent said they were unsure about keeping their plans.

Towers Watson ran the second survey, among mid-sized to large companies. In that sector, 88 percent reported planning to continue offering healthcare coverage in the near future. But many said they would change plan options, reduce subsidies for spouses and dependents, and use spousal waivers or surcharges. A smaller number will raise workers' share of premiums by 5 or more percentage points.