Employer Mandate Explanation

February 20, 2014

On February 10, 2014, the Department of the Treasury and the Internal Revenue Service (the “IRS”) released final regulations under Code Section 4980H (54.4980H-1, 2, 3, 4, 5 and 6) relating to the employer shared responsibility provisions (the “Employer Mandate”) under Health Care Reform. These regulations follow prior guidance, make important changes, provide clarifications and include important new transition relief. The following has been written to include these new important provisions.
In general:
In Notice 2013-45, the IRS delayed the requirement that, certain large employers may be subject to a penalty tax for failing to offer health care coverage for all full-time employees (and their dependents), offering minimum essential coverage that is unaffordable, or offering minimum essential coverage under which the plan’s share of the total allowed cost of benefits is not at least 60% (referred to as “minimum value”) until 2015. The penalty tax is due if any full-time employee is certified to the employer as having purchased health insurance through an Exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee, as provided in Code Section 4980H. In this notice, the IRS gave no indication of how the rules would apply for 2015. In these new final regulations, the IRS and Treasury provide such guidance.