26 US Code §4980 H

(a) Large employers not offering health coverage  If—

(1) any applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and

(2) at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction [Enhanced Silver] is allowed or paid with respect to the employee,

then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.

See our penalty page

(b) Large employers offering coverage with employees who qualify for premium tax credits or cost-sharing reductions

(1) In general If—

(A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and

(B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,

then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and an amount equal to 1⁄12 of $3,000.

See our penalty page

(2) Overall limitation  The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.

(c) Definitions and special rules For purposes of this section—

(1) Applicable payment amount The term “applicable payment amount” means, with respect to any month,  1 ⁄ 12  of $2,000.

(2) Applicable large employer

(A) In general  The term “applicable large employer” means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.

(B) Exemption for certain employers

(i) In general An employer shall not be considered to employ more than 50 full-time employees if—

(I) the employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and

(II) the employees in excess of 50 employed during such 120-day period were seasonal workers.

(ii) Definition of seasonal workers  The term “seasonal worker” means a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor, including workers covered by section 500.20(s)(1) of title 29, Code of Federal Regulations and retail workers employed exclusively during holiday seasons.   Learn More HCTT 2015-17

(C) Rules for determining employer size   For purposes of this paragraph—

(i) Application of aggregation rule for employers All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as 1 employer.

See our webpage on common ownership and affiliated companies

(ii) Employers not in existence in preceding year  In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is an applicable large employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.

(iii) Predecessors  Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.

(D) Application of employer size to assessable penalties

(i) In general  The number of individuals employed by an applicable large employer as full-time employees during any month shall be reduced by 30 solely for purposes of calculating—

(I) the assessable payment under subsection (a), or

(II) the overall limitation under subsection (b)(2).

(ii) Aggregation In the case of persons treated as 1 employer under subparagraph (C)(i), only 1 reduction under subclause (I) or (II) [1] shall be allowed with respect to such persons and such reduction shall be allocated among such persons ratably on the basis of the number of full-time employees employed by each such person.

(E) Full-time equivalents treated as full-time employees  —-  Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.

(F) Exemption for health coverage under TRICARE or the Veterans Administration  – Solely for purposes of determining whether an employer is an applicable large employer under this paragraph for any month, an individual shall not be taken into account as an employee for such month if such individual has medical coverage for such month under—

(i) chapter 55 of title 10, United States Code, including coverage under the TRICARE program, or

(ii) under a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary.

(3) Applicable premium tax credit and cost-sharing reduction  The term “applicable premium tax credit and cost-sharing reduction” means

(A) any premium tax credit allowed under section 36B,

(B) any cost-sharing reduction under section 1402 of the Patient Protection and Affordable Care Act, and

(C) any advance payment of such credit or reduction under section 1412 of such Act.

(4) Full-time employee

(A) In general The term full-time employee” means, with respect to any month, an employee who is employed on average at least 30 hours of service per week.

(B) Hours of service —The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.

(5) Inflation adjustment

(A) In general   In the case of any calendar year after 2014, each of the dollar amounts in subsection (b) and paragraph (1) shall be increased by an amount equal to the product of—

(i) such dollar amount, and

(ii) the premium adjustment percentage (as defined in section 1302(c)(4) of the Patient Protection and Affordable Care Act) for the calendar year.

(B) Rounding If the amount of any increase under subparagraph (A) is not a multiple of $10, such increase shall be rounded to the next lowest multiple of $10.

(6) Other definitions Any term used in this section which is also used in the Patient Protection and Affordable Care Act shall have the same meaning as when used in such Act.

(7) Tax nondeductible — For denial of deduction for the tax imposed by this section, see section 275(a)(6).

(d) Administration and procedure

(1) In general Any assessable payment provided by this section shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.

(2) Time for payment The Secretary may provide for the payment of any assessable payment provided by this section on an annual, monthly, or other periodic basis as the Secretary may prescribe.

(3) Coordination with credits, etc.  The Secretary shall prescribe rules, regulations, or guidance for the repayment of any assessable payment (including interest) if such payment is based on the allowance or payment of an applicable premium tax credit or cost-sharing reduction with respect to an employee, such allowance or payment is subsequently disallowed, and the assessable payment would not have been required to be made but for such allowance or payment.

Resources & Links

Moulder Law Relief, Confusion Associated with §4980H(a) Transition Relief

ADP.com Final Regulations, Delays & Transitional Relief

IRS FAQ‘s

On Feb. 10, 2014, the IRS and Treasury issued final regulations on the Employer Shared Responsibility provisions under section 4980H of the Internal Revenue Code. More information is available on the employer shared responsibility page. The following questions and answers provide helpful information about the guidance:

 

Related Pages in Employer Mandate for Health Insurance  Section

Issue Number:    HCTT-2016-32

Inside This Issue

Six Things to Know about the Employer Shared Responsibility Provisions

The health care law includes the employer shared responsibility provisions, which require applicable large employers to offer health coverage to full-time employees and their dependents. Those that do not offer coverage might be subject to the employer shared responsibility payment.

Here are six facts about these provisions.

  1. These provisions apply to applicable large employers, which includes tax-exempt and federal, state, local and Indian tribal government employers. You’re an applicable large employer if you have 50 or more full-time employees, including full-time equivalents.
  2. If you have fewer than 50 full-time employees, including full-time equivalents, you are not an applicable large employer and are generally not subject to these  provisions. However, you are subject to the rules for large employers if you have fewer than 50 employees, but are a member of an ownership group that has 50 or more full-time equivalent employees,
  3. Under certain conditions relating to the employer’s maintenance of workforce and pre-existing health coverage, an employer won’t be assessed a payment for 2015.  This transition relief is available for tax year 2015 for certain ALEs who have fewer than 100 full-time employees, including full-time equivalents. .
  4. You are subject to the payment if any employee receives the premium tax credit and any one these conditions apply. Your organization:
  • failed to offer coverage to full-time employees and their dependents
  • offered coverage that was not affordable
  • offered coverage that did not provide a minimum level of coverage
  1. You do not report or include an employer shared responsibility payment with any information return you file.
  2. The IRS will contact you about your potential shared responsibility payment amount. You’ll have an opportunity to respond before the IRS assesses any liability or issues a notice and demand for payment.

 

Internal Revenue Bulletin: 2014-9

February 24, 2014

TD 9655

Shared Responsibility for Employers Regarding Health Coverage


Table of Contents

 

Related Pages in Employer Mandate for Health Insurance  Section

size

Leave a Reply

Your email address will not be published.