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Treasury and IRS Want Public Input on Employer Provisions in Health Care Law

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U.S. Rep. Steven C. LaTourette (R-OH) today is urging employers in NE Ohio to weigh in on certain employer provisions in the new health care law that start in 2014. The provisions may result in fines for businesses that provide coverage to their employees as well as to those who don't.

The IRS and the Treasury Department yesterday announced they are seeking public comments regarding a "shared-responsibility" provision in the new health care law that applies to employers with 50 or more full-time employees. The deadline to submit comments is June 17.

Under the new health care law, starting in 2014 employers with 50 or more full-time workers must offer health care that meets new federal standards for coverage or face penalties of $2,000 per employee. Also, employers that offer coverage where some employees cannot afford the premiums could be required to make what the IRS and Treasury describe as a "shared responsibility payment."

"Don't be tricked by this Washington mumbo-jumbo about a 'shared responsibility payment.' This is code for thousands of dollars in tax penalties for employers," LaTourette said. "Small businesses face few good options. If you don't provide coverage, you may face thousands in fines. If you do provide coverage, you may face thousands in fines. This is just another baffling element of the new law."

LaTourette said he fears smaller employers will stop providing coverage altogether because "it will be cheaper to pay a $2,000-per-worker fine than to provide coverage at $11,000 to $12,000 per worker." Full-time employment is typically 30 hours a week, on average.

"One of the main promises of the new health care law was if you like your current coverage you can keep it, but I fear many are going to find themselves looking for new coverage through a state exchange in 2014," he added.

He said he's also troubled that the new law can sting employers with financial penalties if they provide health care coverage to their employees and it's unaffordable to some of their employees under terms of the new law.

LaTourette said under the new law, coverage could be deemed unaffordable if employee-paid premiums top 9.5 percent of an employee's household income. He cited this example: If a NE Ohio employer provides coverage and 10 of the company's 50 full-time workers can't afford premiums and turn to state exchanges, the employer could face penalties of $30,000, or $3,000 per employee. Small businesses with less than 50 full-time workers will not face penalties, he added.

"If I was a small business owner and could avoid these regulatory hoops and fines by keeping full-time employment under 50 workers, I think it'd be pretty tempting," LaTourette said. "However, this is no way to foster growth and create jobs, especially in this economy."

In testimony before a House panel in February 2011, one witness described the employer provisions this way: "a pay or play mandate that penalizes companies with more than 50 employees."

The witness, Paul Howard, Director of Center for Medical Progress, also cited a study by the employee-benefits consulting firm, Mercer, which surveyed almost 3,000 employers. He said the Mercer study "predicts that more than a third of the nation's employers -- 38 percent-- have at least some employees for whom coverage would be considered unaffordable." To avoid the fines, Howard said employers can increase spending on health care benefits so employee premiums don't exceed the 9.5 percent of household income threshold.

LaTourette said he's not surprised employers are concerned with health care provisions. He supported a measure yesterday that passed the House by a vote of 238-183. It repeals mandatory funding in the health care law to create state exchanges, set to begin in 2014.

The IRS and Treasury will accept comments until June 17, 2011:

E-mail to: Notice.Comments@irscounsel.treas.gov. Include "Notice 2011-36" in the subject line.

* Mail to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2011-36), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

"This is your chance to offer your two cents before regulations are finalized," LaTourette said. "If you have a dog in this fight, please don't squander this opportunity to share your thoughts with those who will make decisions that could harm your business."


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