Friday, January 11, 2013

The IRS Issues Even More Health Insurance Rules

CNS News is reporting on the IRS' efforts to ensure that employers don't avoid compliance with ACA requirements.  The IRS is issuing regulatory rulemaking to make everything clear, in a tersely worded 144 page notice.  Here is a little excerpt
   Section 4980H generally provides that an applicable large employer is subject to an assessable payment if either (1) the employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer-sponsored plan and any full-time employee is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction (section 4980H(a) liability), or (2) the employer offers its full-time employees (and their dependents) the opportunity to enroll in MEC under an eligible employer-sponsored plan and one or more full-time employees is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction (section 4980H(b) liability).
Generally, section 4980H(b) liability may arise because, with respect to a full-time employee who has been certified to the employer as having received an applicable premium tax credit or cost-sharing reduction, the employer’s coverage is unaffordable within the meaning of section 36B(c)(2)(C)(i) or does not provide minimum value within the meaning of section 36B(c)(2)(C)(ii).  As noted, an employer may be liable for an assessable payment under section 4980H(a) or (b) only if one or more full-time employees are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction.
  The assessable payment under section 4980H(a) is based on all (excluding the first 30) full-time employees, while the assessable payment under section 4980H(b) is based on the number of full-time employees who are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction with respect to that employee’s purchase of health insurance for himself or herself on an Exchange. In contrast, an employee’s receipt of a premium tax credit or cost sharing reduction with respect to coverage for a dependent will not result in liability for the employer under section 4980H. Under section 4980H(b), liability is contingent on whether the employer offers minimum essential coverage under an eligible employer-sponsored plan, and whether that coverage is affordable and provides minimum value, as determined by reference to the cost and characteristics of employee-only coverage offered to the employee. Section 4980H(c)(4) provides that a full-time employee with respect to any month is an employee who is employed on average at least 30 hours of service per week. An applicable large employer with respect to a calendar year is defined in section 4980H(c)(2) as an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year. For purposes of determining whether an employer is an applicable large employer, full-time equivalent employees (FTEs), which are statutorily determined based on the hours of service of employees who are not full-time employees, are taken into account
It goes on like this for another 100 or more mind numbing pages.  The law will predictably do nothing to improve health care in this country, because it is too complex for anyone to understand or comply with.  If I were running a business, I would just say forget it, drop all coverage, pay my fine and raise my prices to make up for the lost profit.

Predictably, fewer Americans will have health insurance after this law goes into full effect.


  1. I think Thomas Sowell at Stanford put it well. To paraphrase (loosely), why would anyone think that if we couldn't afford our health care system, we could add more users and a new government bureaucracy to administer it and it would all magically become affordable.

  2. Great post. It's all about forcing compliance. The regulations are too complicated to understand, so you cover your employees to the max just to be sure. I can see an industry springing up of health care compliance experts to advise businesses on how to stay in compliance. The thing is going to be the size of the tax code, so it wouldn't be a surprise to see someone like H&R Block branch out into this.

  3. Here's another tidbit for you:

    Under section 4980H(a), an applicable large employer member is subject to an
    assessable payment if the member fails to offer its full-time employees (and their
    dependents) the opportunity to enroll in MEC under an eligible employer-sponsored
    plan and any full-time employee receives a premium tax credit or cost-sharing
    reduction. Commenters have asked whether coverage must be offered to the
    employee’s dependents, and if so, to which individuals the term “dependents” refers.
    Some commenters argued that an offer of dependent coverage is not required under
    section 4980H because the statutory reference to dependents is in parentheses, and
    others noted that the liability under section 4980H is triggered only by a full-time
    employee receiving a premium tax credit (regardless of whether any dependents are
    eligible for, or receive, a premium tax credit).

    Apparently, the ruling is in response to questions and comments from victims, err, businesses. It's good to see that business leaders can stop wasting their time on strategic planning to compete in the international marketplace and devote themselves to the more productive task of complying with the State.