American Benefits Council
Benefits Byte


January 8, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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House Approves Legislation Marking 40 Hours as 'Full Time' for PPACA Purposes

The U.S. House of Representatives approved a measure on January 8 that would establish 40 hours as the benchmark for “full time” work under the Patient Protection and Affordable Care Act (PPACA). The 252-172 vote included 12 Democrats.

The Save American Workers Act (H.R. 30), introduced by House Ways and Means Committee member Todd C. Young (R-IN), would replace the number 30 (hours per week) with the number 40 (hours per week) for purposes of identifying full-time employees and satisfying the PPACA employer mandate under Internal Revenue Code Section 4980H. H.R. 30 would also modify the calculation of full-time equivalent workers by requiring employers to divide the aggregate number of hours of service of employees who are not full-time employees by 174 rather than 120. (See the January 7 Benefits Byte for more details.)

As we reported in the January 7 Benefits Byte, the Council sent a letter to the House prior to the January 8 vote, the Council advocated for an increase in the number of hours considered as “full time,” urging passage of H.R. 30 as a helpful step Congress can take to alleviate employer concerns with 4980H compliance.

Coverage of the Council’s letter in Business Insurance magazine noted that the Council is also calling for an extension of the transition relief for the final 4980H regulations. For 2015, an applicable large employer that offers coverage to at least 70 percent of its full-time employees (and applicable dependents) will not be subject to a penalty. In 2016 and beyond, however, the regulations prescribe that the coverage offer must be made to 95 percent of full-time employees. The Council is advocating for extending the standard of 70 percent beyond 2015, and/or implementing a glide path that gradually phases the percentage from 70 to 95 over several years.

President Obama has issued a Statement of Administration Policy asserting that he would veto H.R. 30 if it reached his desk, noting that the measure would increase the federal budget deficit, reduce the number of people receiving employer-based health insurance coverage and increase the number of individuals who are uninsured. The latest Congressional Budget Office budget score estimates that H.R. 30 would increase the deficit by $53.2 billion over the next ten years. House Minority Leader Nancy Pelosi (D-CA) stated in a January 8 news conference that the measure would add half a million people to the ranks of the uninsured.

Senators Susan Collins (R-ME) and Joe Donnelly (D-IN) have introduced a companion bill in the U.S. Senate, the Forty Hours is Full Time Act (S. 30), but legislative text remains unavailable at this time.

For more information, contact Katy Spangler, senior vice president, health policy, at (202) 289-6700.

IRS Issues Guidance on Retroactive Application of Mass Transit Benefit Parity Provision

On January 8, the Internal Revenue Service (IRS) issued guidance on the application of the retroactive increase in the pre-tax allowance for mass transit benefits for 2014.

Notice 2015-02 provides guidance for the mass transit benefit parity provision contained in the recently enacted Tax Increase Prevention Act (H.R. 5771), a short-term extension of certain expiring tax provisions. Among other provisions, H.R. 5771 extended a provision in the American Taxpayer Relief Act of 2012, which had provided for an increase from $130 to $250 per month in the pre-tax allowance for mass transit expenses, to match the allowance for parking (for more information, see the December 3, 2014 Benefits Byte).

The notice provides guidance to employers on the retroactive application of the increased exclusion and how the increase applies for 2014 to reduce filing and reporting burdens on employers. It also provides special administrative procedures for employers using Form 941, Employers Quarterly Federal Tax Return, for the fourth quarter of 2014.

For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).