More HH Legal Updates

Houston Harbaugh is a full service law firm headquartered in Pittsburgh and serving Pennsylvania, West Virginia and Ohio. This collection of blogs further highlights the firms capabilities in several practice areas.

Affordable Care Act: Determine Whether to “Pay or Play”

One of the most important decisions facing large employers under the Affordable Care Act (ACA) is how to respond to the employer shared responsibility provisions in the ACA, i.e., whether to “pay or play.” Essentially, these rules require such an employer to maintain a group health plan meeting the ACA’s standards for “Minimum Value” and “Affordability,” or pay penalties for failing to do so. The rules were set to become effective January 1, 2014, but in light of complexities involving reporting requirements, the Obama Administration has delayed the effective date to January 1, 2015.

For purposes of the pay or play rules, a large employer is one that employed at least 50 “full-time equivalent” (FTE) employees in the prior year. Generally, an employee is considered to be full-time if the employee works at least 30 hours per week or 130 hours per month. Under rules similar to those that apply for purposes of qualified retirement plans (e.g., pension and 401(k) plans), all employees in certain groups of related employers (controlled groups and affiliated service groups) must be counted.

The penalties imposed on employers who elect to “pay” are twofold. First, if the employer fails to offer health coverage meeting certain standards to every full-time employee, and if any one employee receives tax-subsidized coverage through an individual exchange, the employer must pay a $2,000 penalty for every full-time employee (excluding the first 30 employees).

Second, if the employer offers coverage but an employee obtains tax-subsidized coverage through an individual exchange, the employer must pay $3,000 for that employee. At first glance, it might appear that the application of this penalty is totally outside the employer’s control. However, while an employee is free to decline employer coverage and switch to the exchange, the tax credit is available to the employee only if the employee’s required contribution to the employer plan for single coverage exceeds 9.5% of the employee’s income or the plan pays less than 60% of the cost of covered services.

Many employers have already performed a quick analysis and determined that paying the ACA penalties will be less expensive than the cost of maintaining a group health plan meeting the required standards. However, the financial analysis is just one component of the pay or play decision. Many employers have expressed intent to continue to offer existing coverage because their plan is viewed as an essential part of their benefits package, which they need to compete in the labor market. Also, eliminating existing coverage and forcing employees into the exchange could adversely affect employee morale, wellness, and productivity. Finally, terminating coverage could result in lost tax advantages; while premiums for employee coverage are deductible business expenses, the ACA penalties will not be deductible.

On the other hand, employers that elect to forego employee coverage and pay the penalties could share the savings with employees, in the form of higher wages or other benefits. For many employers, the trade-offs of pay or play will substantially depend on their mix of higher and lower wage earners. For example, a professional firm with a high percentage of well-paid workers might elect to retain its plan, while a restaurant that has been covering management employees but not its kitchen and wait staff might elect to drop its plan.

Houston Harbaugh remains available to assist employers in determining whether they are subject to the pay or play mandate (counting of employees, controlled group analysis, etc.), and for those who are subject, calculation of penalties and assessment of options.

About Us

Trusted and Cost-Effective Business Law, Business Litigation and Estate Planning Attorneys and Counselors; Building Client Confidence™ with Businesses and Individuals Since 1975

Our firm offers individualized solutions and the highest quality, client-driven and cost effective legal services. Houston Harbaugh, P.C., is a well-known law firm in Pittsburgh, serving Pennsylvania, West Virginia and Ohio. Our diverse practice areas include Business Law, Business Litigation, Estate and Succession Planning, Intellectual Property Litigation and Prosecution, Employment and Labor, Employee Benefits, Oil and Gas, Landowner and Property Dispute Counseling and Litigation, Health Care, Environmental, Real Estate, Construction, Complex Tort and Catastrophic Injury Litigation, Insurance coverage and Bad Faith Law, Mediation, Arbitration and Special Master appointment work. As one of the 20 largest law firms in Pittsburgh, our lawyers serve clients on a regional and national basis.

We regularly represent regional, national and international insurance carriers in defense, insurance coverage, unfair trade practices and bad faith matters, and we issue opinions letters and coverage analyses for insurers. We defend designers, manufacturers and sellers in pharmaceutical, products and medical products liability matters and we litigate and try cases involving catastrophic injuries, industrial accidents, toxic torts, professional, engineering and architectural negligence, and agent and broker claims and lawsuits.

Why Houston Harbaugh, P.C.? The Answer Is Clear.

We are accomplished litigators with a strong track record of success in the courtroom and in jury trials. We design and manage business transactions, succession planning, banking and regulatory issues. Our firm has regularly been featured in the U.S. News “Best Lawyers”® rankings of Pittsburgh’s “Best Law Firms.” Our attorneys are also regularly nominated as “Best Lawyers” in this publication. In addition, many of our attorneys are consistently recognized in the annual national Super Lawyers peer review rankings, and our corporate practice has been selected as the winner of The Legal Intelligencer’s Best Law Firm Corporate Practices contest for the Midsize Firm category. Our property and landowner counseling and litigation practice in Oil and Gas and Real Estate is ranked at the top on a regional basis. We help clients to apply for, prosecute, audit, manage and protect intellectual property rights in patent, trademark, copyright and trade secrets. We are admitted to the USPTO and have experience in the TTAB. Some of our firm’s shareholders are Adjunct Professors of Law at the Duquesne University School of Law in litigation and intellectual property courses.

Helping You Achieve Your Goals For Over 40 Years

Since our inception as a health care practice in 1975, our attorneys have represented clients in state and federal courts in Pennsylvania, West Virginia, Ohio and throughout the nation. We have grown into a multi-disciplinary practice with the ability to handle complex business transactional and litigation matters. We counsel on estate and succession planning and on trust and guardianship matters. We have a strong employment and labor practice. We represent clients in trade secret counseling and federal Defend Trade Secret Act (DTSA) counseling and litigation. Our DTSALaw® practice group is well versed in this federal body of trade secret law. We counsel, draft, litigate and defend claims involving employment non-compete, restrictive covenants, non-disclosure agreements and breach of contract matters. We service clients in the collection of debts and in bankruptcy creditor matters. Houston Harbaugh litigates in Orphans and Probate courts for matters involving estates and trusts. We also provide mediation and arbitration services to parties involved in litigation and our lawyers are currently serving as court appointed special masters in the Federal Courts.

Contact us and Learn How We Can Help You and Your Business

For more information on how we can help you, call our Pittsburgh office at 412-281-5060. You can also reach us online.

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