Recently, the Practical Law Company published a Q&A with me regarding issues raised by the Affordable Care Act in mergers and acquisitions. We discussed various items employers should review, such as full-time worker definitions, exposure to tax under the employer mandate, and integration of each party’s health programs. Following is an excerpt:
Q. The ACA is perhaps one of the most talked about pieces of legislation in recent history. ln terms of M&A transactions, what do you think are the ACA's major effects?
A. The ACA has created many new responsibilities and risks for employers. There are a vast number of requirements, including providing coverage, cost-sharing between employers and employees, and notice requirements, as well as the risk of incurring penalties. A potentiaI buyer of a target company needs to consider these new requirements to evaluate current and prospective compliance risks. As with all commerciaI and legal risks, there may be only so much a buyer can do about a target's compliance efforts to date. However, the better a buyer understands the target's workforce and plans, and the steps the target has taken to implement the ACA, the better the buyer can gauge what it must do to get the target into compliance post-transaction.