Opt-Out Payments Top Concern on ACA's Employer Mandate

   Compensation & Benefits Library™ gives you accurate answers and practical guidance to help you design, analyze, compare, administer, and communicate compensation and benefits...

By Kristen Ricaurte Knebel

Feb. 22 — Health coverage opt-out payments and the special rehire rules under the Affordable Care Act's employer mandate received the most ink from groups providing comments to the Internal Revenue Service and Treasury Department on December guidance that covered a hodgepodge of issues involving the health-care law.

The treatment of opt-out payments—funds employers give to workers only if they decline coverage under an employer-sponsored health plan—was a common concern among commenters, with the American Benefits Council and the National Business Group on Health voicing misgivings about the way the IRS and Treasury said in Notice 2015-87 that they intend to treat such payments.

The IRS and Treasury's plan to revisit the issue of the “special rehire rules” under the ACA's employer mandate—in tax code Section 4980H—received positive reviews from the National Education Association, AFL-CIO and Service Employees International Union, but their comments suggest there are some kinks to work out before any new rules are finalized.

Among other issues addressed in the comment letters was the IRS and Treasury's intentions to adjust the 9.5 percent affordability threshold for employer-provided health-care coverage, with the ABC, NBGH, AFL-CIO and the National Coordinating Committee for Multiemployer Plans all giving it the thumbs-up.

On Dec. 16, the IRS and Treasury issued Notice 2015-87, which reiterated that some relief was available for reporting under Section 6056 related to coverage offered in the 2015 calendar year. The notice, which was in a question-and-answer format, also clarified some areas of the employer mandate—or shared-responsibility provisions—and other topics related to the ACA.

The comment letters were dated Feb. 18, which was the comment deadline.

For More Information

For more information, see Compensation and Benefits Library’s Tax Aspects of Health Plans Under the Affordable Care Act chapter.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com