Employer shared responsibility

One goal of the Affordable Care Act (ACA) is to reduce the number of uninsured people in the U.S. and promote employer-sponsored health care benefits. ACA uses several techniques to achieve this.

Originally set to begin in 2014, but delayed until 2015, large employers (100 or more full-time employees) face penalties (generally $2,000 per employee) if they do not offer minimum essential coverage to their employees and dependents and any of their employees receive a subsidy to obtain coverage through a public health care exchange. Mid-size employers with 50 to 99 employees must comply with this requirement starting in 2016. These employers also face penalties if the coverage they offer is considered unaffordable as specified by the law.

The ACA originally required employers that offer coverage and pay a part of the cost of coverage to offer free choice vouchers to certain low-income employees beginning in 2014. This provision was repealed in 2011 as a part of the Appropriations Act.

Government Resources


Transition Relief Provided to Employers with 50 - 99 Employees

The Internal Revenue Service (IRS) issued final regulations that provide transition relief to employers with 50 - 99 employees and other clarifications. Highlights of the rules include addressing a number of questions about how plans can comply with the employer shared responsibility provisions; ensuring that volunteers such as firefighters and emergency responders do not count as full-time employees; and phasing in provisions for businesses with 50 to 99 full-time employees and those that offer coverage to most but not yet all of their full-time workers. 2/12/14

The Departments of Treasury, Labor (DOL) and Health and Human Services (HHS) released proposed regulations amending limited excepted benefits, 1/23/14

CCIIO Provides Guidance for Obtaining Recognition as Minimum Essential Coverage, 11/1/13

Employer Shared Responsibility Mandate Delayed One Year

The Internal Revenue Service (IRS) released Notice 2013-45 providing transition relief from certain Affordable Care Act (ACA) information reporting requirements for 2014, 7/10/13

The U.S. Department of Treasury announced a one-year delay in the enforcement of the employer shared responsibility mandate under the Affordable Care Act (ACA).

The ACA includes information reporting (under section 6055) by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting (under section 6056) by certain employers with respect to the health coverage offered to their full-time employees. The Treasury Department plans to release proposed rules implementing these provisions this summer. Once these rules have been issued, the Administration will strongly encourage plan sponsors to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015 and to provide real-world testing of reporting systems.

The Administration is extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015. This delay does not affect employees' access to the premium tax credits available under the ACA (nor any other provision of the ACA). 7/3/13 Read More....

HHS, DOL and Treasury Issue Proposed Rules on the Ninety-Day Waiting Period Limitation and Technical Amendments to Certain Health Coverage Requirements Under the ACA

HHS, DOL and Treasury issued proposed rules to implement the 90-day waiting period limitation, which recognizes that multiemployer plans may include different eligibility conditions. The proposed conforming amendments also make changes to existing requirements such as preexisting condition limitations, elimination of lifetime and annual limits and other portability provisions added by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

For multiemployer plans they acknowledge that plans maintained under collective bargaining agreements have unique operating structures and may include different eligibility conditions based on the participating employer's industry or the employee's occupation including hours banks. Comments are invited on these proposed rules and on whether any additional examples or provisions are needed to address multiemployer plans. 3/21/13

IRS Publishes Correction to Proposed Rule on Shared Responsibility for Large Employers with Transition Relief for Multiemployer Plans

On March 15, 2013, The Internal Revenue Service (IRS) published a correction to a proposed rule that was published January 2, 2013. The proposed rule indicates employer contributions to multiemployer health plan coverage can satisfy employer's shared responsibility requirement. This proposed rule is the first time that the Treasury Department has indicated how the employer penalty applies to employers that contribute to multiemployer plans. The proposed rule adopts an approach that should give contributing employers an incentive to continue their contributions to multiemployer plans. The multiemployer portion of the rule is proposed to be transitional through 2014, so further guidance will be necessary. 3/15/13

IRS Releases Proposed Rule and FAQs on Shared Responsibility

The IRS released a proposed rule and FAQs providing guidance on shared responsibility issues for employers regarding employee health coverage. These proposed regulations affect employers that meet the proposed definition of applicable large employers; an employer that employed an average of at least 50 full-time employees (taking into account FTEs) on business days during the preceding calendar year. The proposal builds on comments recevied as a result of previously issued guidance and addresses:

  • determination of large employer status, including aggregation rules;
  • identification of full-time employees for Section 4980H purposes, including hours of service rules;
  • compliance issues;
  • liability issues;
  • assessment and payment of liability;
  • reporting;
  • 90-day waiting period; and
  • transition rules.

In the section on transition rules, the IRS notes it is seeking input on how Section 4980H should apply to employers participating in a multiemployer plan. Section 4980H is effective for months after December 31, 2013. Employers may rely on the proposed regulations for guidance pending the issuance of the final regulations and/or other applicable guidance. 1/2/13

Technical Release No. 2012-02: Guidance on 90-Day Waiting Period Limitation under Public Health Service Act § 2708, 8/31/12

IRS Notice 2012-59 provides temporary guidance regarding the 90-day waiting period limitation in Public Health Service Act (PHS Act) section 2708.1. The guidance will remain in effect at least through the end of 2014. 8/31/12

IRS Notice 2012-58 describes safe harbor methods that employers may use (but are not required to use) to determine which employees are treated as full-time employees for purposes of the shared employer responsibility provisions of IRC § 4980H. Specifically, it includes a safe harbor method that employers may apply to specified newly-hired employees. 8/31/12

IRS Notice 2012-31, provides information on an approach to determining whether an eligible employer-sponsored health plan provides minimum value. 4/26/12

HHS released a bulletin, Actuarial Value and Cost-Sharing Reductions Bulletin, to provide information on the regulatory approach that HHS plans to propose to define actuarial value (AV) for qualified health plans (QHPs) and other non-grandfathered coverage in the individual and small group markets as well as to implement cost-sharing reductions under section 1402 of the Affordable Care Act. 2/24/12