Marketwatch recently reported that the Obamacare law is contributing to the removal of 15,000 working spouses from the United Parcel Service (UPS) health plan. Unfortunately, this could be true because of the structure of the new healthcare reform law.
Key to the story is that spouses are excluded from the definition of eligible dependent under Section 152(f)(1). The implication of this omission is that so-called “pay or play” penalties would not apply to large employers who choose this road.
Here is an excerpt of the law that enables this to be true:
For any calendar month, a large employer is subject to an assessable payment if either: ” (1) the employer fails to offer to substantially all (at least 95%) of its full-time employees (and their dependents) the opportunity to enroll…” The assessable payment is currently a $2,000 per employee penalty under Section 4980H(a)
Calculating the 2014 4980H(a) annualized penalty: The number of Full-time Employees of the applicable large employer member (reduced by the allocable share of the 30-employee reduction) multiplied by $2,000.
Read a related story on the new Obamacare law.