Employers with 20 or more employees for each working day in each of 20 or more work weeks in the preceding or current calendar year are subject to TEFRA and MSP rules. Full-time, part-time, union, and non-union employees are counted as one employee each. For the purpose of group size, employees are counted regardless of whether they are eligible or enrolled in the employer plan.
Changing from non-TEFRA to TEFRA status occurs on the date that the employer has 20 or more employees for each working day in each of 20 or more work weeks in the preceding or current calendar year. Whereas changing from TEFRA to non-TEFRA can only occur on January 1, not at the group renewal.
Example: A group reaches 20 employees or more for 20 or more weeks, which is not necessarily consecutive, as of August 8, 2021. Regardless of any changes in the employee count, the group remains subject to TEFRA or MSP from August 8, 2021 through the subsequent year of 2022 or until December 31, 2022. If during 2021, they did not have 20 or more for 20 or more weeks, their status changes to non-TEFRA January 1, 2022.
Self-employed individuals who participate in the employer plan are not counted in determining if the group is subject to MSP. Be very careful with who is categorized as “self-employed.” This language comes from federal regulation. The best course of action is to have the employer consult with a Certified Public Accountant (CPA) familiar with health law.
Independent Contractors are not counted towards determining MSP status or group size. Consult your tax professional regarding leased employees.
Subsidiaries of foreign companies must count the number of employees of the organization worldwide.
For more information, visit the Medicare Who Pays First Guide on Medicare.gov.or contact your Total Benefit Solutions Inc health insurance experts at (215)355-2121.