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Mobility and the ACA

With the individual and employer mandates approaching, new concerns are emerging around the healthcare-reform law's potential impact on globally mobile workers and their organizations.

Tuesday, March 11, 2014
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Employers and HR and benefits experts are paying increasing attention to the possible impacts the Affordable Care Act could have on globally mobile employees.

"As we get closer and closer to the [March 31 deadline for the] individual mandate, employers' interests in finding out what's going on and what their requirements are [concerning ACA and global mobility] are growing," says Steve Wojcik, vice president of public policy at the Washington-based National Business Group on Health.

Nevertheless, Amy Bergner, managing director of PricewaterhouseCoopers' human resource services practice in Washington, says she's concerned about the numbers of employers that aren't concerned enough about this yet.

"When I've raised the issue [with some clients], it has seemed to surprise the people I'm talking to," she says, "because this is often a population that isn't looked on and focused on in terms of the ACA. [Regardless], if they are overlooking this group, they could be paying for it down the road."

Or, as a Feb. 11 PwC Insights alert -- "United States: Consider the Affordable Care Act's impact on globally mobile employees" -- puts it: "Although not all [ACA-related] guidance has been finalized, global-mobility professionals should think about taking some proactive steps now to prepare."

So what should you do? Probably your best bet out of the gate would be to consult with the right people. In most companies, says Bergner, "people dealing with globally mobile workforces may be in HR, they may be in the tax department, they're often in relocation; where they're not are in the groups focusing on complying with the ACA." These minds, along with legal counsel, need to start thinking together, she says.

For HR, that means getting all the stakeholders in a room and making sure the internationally mobile group "has a voice in this ACA implementation," says Derek Nash, managing director in PwC's Washington-based international-assignment-services group.

"It's much better to think about this now, proactively as opposed to reactively, while you can still deal with them as a group," he says, "to determine if anyone out there might be a problem."

What should employers know about foreign nationals working here and U.S. workers abroad? For one, foreign nationals on assignment in the United States who become residents for income-tax purposes will be subject to the ACA's "minimum essential coverage" requirement, unless another exemption applies. The MEC is the law's stipulation that individuals must generally maintain health coverage or face a tax penalty payable upon filing their U.S. income-tax return (yet another deadline fast approaching).

"My concern," says Nash, "is that, if these individuals are filing 2014 tax returns as residents and the right boxes aren't checked, there could be a lot of problems for those individuals and their employers [in terms of penalties owed]."

How prevalent this potential problem might be is anyone's guess, he adds, but "my guess is every company has at least one or two individuals who they should review."

Duration of stay is also a factor to be considered. According to Wojcik, the individual mandate applies to all "in-patriots" (foreign nationals working in the United States) if they've been here more than 90 days.

That said, he adds, "I think there's been a tremendous amount of flexibility by [the Obama] administration to work this out."

Indeed, guidance issued by the U.S. Department of Labor earlier this year opens the possibility that coverage under a foreign insured plan for that country's expatriates may also qualify as MEC, satisfying the individual mandate for foreign employees working in the United States.

"As long as [your in-patriots are] covered by a U.S.-based plan or, in most cases, a foreign plan that satisfies the mandate," says Wojcik, "you're OK."

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Duration is also a factor -- albeit a fairly complicated one -- for U.S. citizens and residents (e.g., green-card holders) living abroad. Although they, too, are subject to the ACA's MEC requirement, if one of them "has a tax home outside the United States and is a bona-fide resident of a foreign country or countries during an uninterrupted period that includes an entire taxable year or who is present in a foreign country for at least 330 full days during a period of 12 consecutive months, [he or she] will be deemed to satisfy the MEC requirement," the PwC alert states.

How full-time-employee equivalents are counted could also become a factor for employers seeking to comply with the ACA's employer mandate -- which goes into effect Jan. 1, 2015 (and, now, Jan. 1, 2016, for smaller employers) -- requiring them to offer coverage to at least 95 percent of full-time employees or pay $2,000 times the number of FTEs.

To appreciate just how complicated complying could become, consider this portion of the PwC alert: "Under certain safe-harbor methods, employers may identify full-time employees as full-time for the duration of a following stability period. In such a case, it might be possible that a U.S. employee working 30 hours a week during a measurement period who goes on assignment abroad would still be treated as a full-time employee during the subsequent stability period. Alternatively, a short-term business traveler in the United States, including a non-resident alien, who does not average at least 30 hours a week during the measurement period, would not be considered a full-time employee during the subsequent stability period.

"The global employer will need to track the hours of such employees and decide upon an appropriate strategy that may include certain measurement and stability periods, so as to not inadvertently trigger penalties for failure to offer coverage," the alert states.

Is anything a sure safeguard measure for employers grappling with the ACA and expats?

"If I were an employer, to be safe," says Wojcik, "I would provide notices of coverage [and coverage requirements] to all employees, wherever they are, to let them know they should be protected."

Beyond that, he says, "consult with benefits consultants and legal counsel, especially as the regulations change."

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