American Benefits Council
Benefits Byte

2014-042

May 20, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

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IRS Releases Updated Questions-and-Answers on Employer Health Coverage under PPACA

On May 13, the Internal Revenue Service (IRS) issued updated “questions and answers” related to the employer “shared responsibility” provisions of the Patient Protection and Affordable Care Act (PPACA) and employer payment plans that reimburse employees for premiums paid for individual policies purchased in or outside the state or federal health exchanges (or “Marketplaces”). The updated Q&As generally reflect final regulations governing Internal Revenue Code Section 4980H and other related PPACA guidance.

Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act, is a periodically updated collection of frequently asked questions and answers addressing a range of implementation issues related to the employer mandate. The newly added questions, Nos. 47 through 56, discuss:

  • The consequences of a plan that offers health insurance coverage to all full-time employees but not to dependents.
  • Whether liability arises for a company that offers all its full-time employees and dependents health insurance coverage but one of the employees’ dependents enrolls in coverage through an exchange.
  • Who certifies a company’s satisfaction of the minimum value requirements.
  • Whether a company must offer insurance to avoid a shared responsibility penalty, even if all employees obtain health insurance coverage through another source.
  • How to determine if a business is part of a controlled group under the shared responsibility rules.
  • Differentiating between seasonal “employees” and seasonal “workers.”
  • Measurement of an employee’s average hours worked if that worker works for multiple companies, or for two different subsidiaries of a parent corporation that forms a controlled group. 

The document also discusses a number of situations (Questions No. 47, 50 and 55) related to small businesses.

The Q&As on Employer Health Care Arrangements consists of only two questions, addressing the consequences to an employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in (or outside) the state or federal Marketplaces. As explained in the Q&As, the IRS considers this an “employer payment plan,” as described in IRS Notice 2013-54 and U.S. Department of Labor Technical Release 2013-03. These arrangements are considered to be group health plans subject to the market reforms and cannot be integrated with individual policies to satisfy those requirements. As a result, according to the Q&A, “…such an arrangement fails to satisfy the market reforms and may be subject to $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.”

For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.



The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).