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Beverage Media
August 2013
know
the
law
It is important to note that the new
law imposes significant responsibility on
the part of employers. Moreover, a given
employer’s requirements are to be based
on the number of employees, which in
turn is based on rather complicated guide-
lines that will be enforced by the IRS.
As soon as the regulations are issued,
employers with more than the equiva-
lent of 200 full-time employees will be
required to automatically enroll new
full-time employees into a health ben-
efit plan. Beginning January 1, 2014, any
employer that has the equivalent of 50
full-time employees is required to offer its
employees and their dependents health
insurance coverage. At the same time,
employers with 100 employees and less
will have access to the new public health
insurance exchange. Larger employers
will not have access to the exchange un-
til 2017. Employers with fewer than 25
employees may be eligible for a tax credit
to help pay insurance premiums. Under
the law, employers are not permitted to
discriminate by offering better health
care to highly compensated employees
than to its other workers.
Critical Term:
‘Controlled Group’
The IRS has elected to apply its pension
plan regulations to the PPACA. These
regulations were designed to prevent
systems designed by business owners to
favor owners and managers and include
complicated rules related to common
ownership and control. All the em-
ployees in a “Controlled Group” must
be counted to determine if an employer
has the equivalent of 50, 100 or 200
full-time employees. Similarly, the non-
discrimination rules apply throughout
the entire group.
The term “Controlled Group” is not
self-explanatory. The IRS applies com-
plicated attribution rules which bring
certain family members under a single
umbrella. Because New York does not al-
low ownership interests in more than one
package store, and minors are not permit-
ted to own an interest in a licensed entity,
such attribution rules would not normally
affect package stores.
However, consider this scenario: A
father owns one package store, his wife
owns another and their daughter owns a
third. A fourth business provides account-
ing and management services to all three
companies. Even though the services
provided by the fourth business may not
violate the New York State Liquor Au-
thority’s rules against joint ownership, the
IRS could define all four companies to be
a single employer under the PPACA.
Or consider a scenario in which a
woman owns a package store with 10 full-
time employees and a catering establish-
ment with 40. The IRS can treat the two
businesses as a “brother sister” affiliated
group with 50 full-time employees.
Potential Pitfalls
The penalties for non-compliance with
the PPACA can be extremely onerous.
Employers that do not offer health cov-
erage can be assessed a penalty equal to
the number of full-time employees who
apply for and receive a federal premium
tax credit in connection with the pur-
chase of health insurance multiplied by
$2,000 per year.
Even if the employer does cover all
full-time employees, it may be assessed
a penalty if the coverage being offered
either is unaffordable, fails to provide
minimum essential coverage or fails to
provide minimum value, and at least
one full-time employee receives a fed-
eral premium tax credit in connection
with purchasing coverage on a public
health insurance exchange.
A charge of discriminatory cover-
age might result in a penalty of $100 per
day for each non-highly-compensated
employee who receives coverage that is
less favorable.
The PPACA is filled with potential
pitfalls. If you have close to 50 full-
time employees in one or more busi-
nesses, or if you work with a company
which supplies management services,
discuss your legal obligations with a
competent professional.
Keven Danow is an attorney representing members of all
three tiers of the Beverage Alcohol Industry and mem-
ber of the firm of Danow, McMullan & Panoff, P.C. 275
Madison Ave, NY, NY. 10022. (212 3703744). Website:
dmppc.com; email:
. This article is
not intended to give specific legal advice. Before taking
any action, the reader should consult with an attorney
familiar with the relevant facts and circumstances.
Taking Stock of the Patient Protection and
Affordable Care Act (aka Obamacare)
Details & Definitions Have Big Implications
By Keven Danow
T
he Patients Protection and Affordable Care Act (PPACA) is in
its infancy, and regulations are still being generated. Much
remains unknown and unknowable. The Supreme Court found
it a constitutional exercise of the federal government’s taxing
powers. Moving forward, the Internal Revenue Service (IRS) has been
charged with the responsibility of overseeing its implementation.
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