IRS weighs U.S. health coverage rules in tax lobbying fight

WASHINGTON, April 22 Mon Apr 22, 2013 5:42pm EDT

WASHINGTON, April 22 (Reuters) - Are ski instructors seasonal workers that should get health care coverage by their employer under President Barack Obama's healthcare overhaul?

That is just one of many details the U.S. Internal Revenue Service has to work out by January 2014, with hordes of special interest groups lobbying the agency between now and then.

Assigned to implement the employer coverage section of Obama's 2010 Affordable Care Act, the IRS will hold a hearing at its Washington headquarters on Tuesday to hear from various groups interested in the so-called "pay or play" rules.

Under the rules, a large employer must pay an excise tax penalty if it fails to provide adequate coverage for even one full-time employee, forcing that employee to get a tax credit to buy health insurance through one of the new state insurance exchanges.

The IRS must write rules defining which employers, with 50 or more full-time employees, need to provide coverage. The rules also must spell out which employees qualify for this coverage.

The IRS issued proposed rules in January, which are subject to change following the hearing.

"These are very complicated issues" for the IRS, said Seth Perretta, a lawyer with Crowell & Moring LLP. "They're working hard to come up with rules that employers will like, while trying to limit the possibility for manipulation."

For example, the IRS has not yet fully defined a seasonal employee who qualifies for coverage, casting doubt over coverage for professionals such as ski instructors and, more meaningfully for most communities, school teachers.

Some school districts are worried their costs of coverage will rise for some employees over summer-break months.

The American Federation of Teachers, a union for teachers, warned in a March 18 letter to the IRS that the proposed rules could encourage employers to reduce employees' hours.

The AFL-CIO, the largest labor federation, is worried employers might find loopholes to dodge health coverage.

"The proposed rule offers employers a myriad of ways to reduce the scope of coverage they currently offer," the AFL-CIO said in a March 18 letter to IRS.

Temporary staffing companies are worried, too. They fear being hit by the law's penalty if they do not provide health coverage to their temporary workers.

Hire Counsel, a temporary legal staffing firm serving law firms and corporations, is asking the IRS to exempt staffing agencies from providing health insurance for temporary employees, according to its March 18 comment letter.

In May, the IRS will hold a hearing on the "minimum essential coverage" healthcare rules.

The IRS is also expected to soon issue guidance on what new forms employers and employees must fill out for healthcare purposes.

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Comments (1)
johnmorris wrote:
My wife works for a fast food restaurant that is owned by a person who has 165 franchises of the same company. He counts each one as a separate business with fewer than 50 employees, allowing for workers to work up to 39 hrs. and not receiving benefits. Her check comes out of his corporate accounting office located in another state. It seems to me that small companies that exceed the 50 worker limit could reorganize into separate smaller companies (maintainence, accounting, production, management, etc.) and avoid the legal need to provide insurance

Apr 22, 2013 7:48pm EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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