IRS to Begin Enforcing 4980H Penalties on Large Employers Before End of 2017

On November 2, 2017, the IRS issued guidance regarding the enforcement of Employer Shared Responsibility payments, otherwise known as the Section 4980H penalty. Questions 55-58 of the IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act indicate that the IRS is moving forward with assessing penalties on Applicable Large Employers (“ALEs”) who failed to offer appropriate health care coverage under Section 4980H for the 2015 calendar year.

An ALE is generally an employer who employs at least 50 full-time employees during the calendar year. An ALE will be assessed a penalty for the 2015 year if any full-time employee received a premium tax credit or cost-sharing reduction and either: (a) the employer failed to provide minimum essential health coverage to 95% of its full-time employees; or (b) the employer offered minimum essential health coverage to 95% of its full-time employees, but the coverage was not affordable or did not provide minimum value. Read More ›

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Agencies Come Down Hard on Various Employer Health Plans and Arrangements

As we move into 2015, employers continue to grapple with numerous Health Care Reform concepts.  Employers should be cautious regarding arrangements promoted to avoid health care penalties because the agencies are cracking down, as shown below.

On November 4, 2014, the IRS and other agencies indicated that they have become aware that group health plans that do not provide coverage for in-patient hospitalization and physician services are being promoted to employers as providing “minimum value coverage” that would allow the employer to avoid some Health Care Reform penalties if other requirements are met.  The Departments believe that such plans do not provide minimum value coverage and are going to implement regulations to this effect in 2015.  Read More ›

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Gear Up for Reporting of Health Coverage

Starting in 2016, Section 6055 of the Internal Revenue Code (the “Code”), which was added by the Health Care Reform Act, requires all entities providing “minimum essential coverage” (“MEC”) to submit information to the IRS concerning each covered individual for the 2015 calendar year.  Section 6055 also requires these entities to provide statements containing similar information to certain covered individuals.  MEC is broadly defined to include any group health plan or group health insurance that is not an excepted benefit (e.g., stand-alone dental or vision plans). As noted, all entities providing MEC must comply with Section 6055. This includes, for example, all employers sponsoring self-insured group health plans, regardless of employer size.  Read More ›

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Final Regs on Health Care Reform Large Employer Penalties May Help Employers Who Hire Employees From Staffing Firms

As explained in my Checklist for Employers, a large employer will have to pay a subsection (a) penalty for any month if it does not offer “minimum essential coverage” (“MEC”) to substantially all (i.e., 70% for 2015 and 95% for future years) of its full-time employees and their dependents if one or more full-time employees receive a premium tax credit to help pay for coverage on a Marketplace.

For purposes of the forgoing rule, employers must take into consideration each of their common law employees. Oftentimes, employees that an employer hires from a staffing firm may be the employer’s common law employees.  Read More ›

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What the heck is MEC?

Health care reform is confusing.  There are so many new terms and concepts.  One concept that has been getting a lot of attention lately is MEC.  MEC stands for “minimum essential coverage” and is a fancy name for basic health coverage. MEC is important for two main reasons —

  • First, starting in 2014, individuals who don’t have MEC, and don’t qualify for an exemption, will have to pay a penalty tax.
  • Second, starting in 2015, large employers who don’t offer MEC to substantially all of their full-time employees and their dependents (i.e., natural and adopted children) will have to pay a nasty penalty under Code Section 4890H(a) (the “subsection (a) penalty”).
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