Proposed Regulations Issued on Employer Shared Responsibility Payments under the Affordable Care Act

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Last Friday, the Department of the Treasury issued proposed regulations on the employer shared responsibility provisions in section 4980H of the Internal Revenue Code, under which an employer may be subject to an assessment for failure to offer its full-time employees health coverage that is affordable and provides a minimum value. These provisions take effect for the first time in 2014 and generally apply to employers with at least 50 full-time equivalent employees (“applicable large employers”). Employers are permitted to rely on these proposed regulations pending the issuance of final regulations or other guidance.

The proposed regulations build upon a series of proposals set forth in earlier guidance, the details of which were described in previous Ropes & Gray Alerts. The proposed regulations go beyond the scope of that prior guidance, however, to address for the first time certain aspects of how applicable large employer and full-time employee status will be determined and how an assessable payment will be calculated and assessed. In addition, the proposed regulations provide a number of new safe harbors for employers who offer coverage to their full-time employees, as well as transition relief for the first year of application in 2014. Simultaneously with the release of the proposed regulations, the IRS posted on its website questions and answers that provide less technical explanations of the statutory employer shared responsibility provisions and the proposed regulations.

Please see full alert below for more information.

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Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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