Employer Shared Responsibility (Portfolio 332)

Tax Management Portfolio No. 332, Employer Shared Responsibility, examines the effect of the Patient Protection and Affordable Care Act (ACA) on employer-based group health plans with an emphasis on “applicable large employers” (i.e., employers with 50 or more full-time and full-time equivalent employees operating in the United States). To view this Portfolio, visit Bloomberg Tax for a free trial.

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Tax Management Portfolio No. 332, Employer Shared Responsibility, examines the effect of the Patient Protection and Affordable Care Act (ACA) on employer-based group health plans with an emphasis on “applicable large employers” (i.e., employers with 50 or more full-time and full-time equivalent employees operating in the United States). The Portfolio's principal focus is on Title I, Subtitle F, Part II of the ACA, which establishes rules governing “Shared Responsibility for Employers.” Other substantive provisions of the ACA also are addressed to the extent that they interact with the employer shared responsibility rules or are otherwise integral or important to their application. These provisions include the requirement that U.S. citizens and green-card holders maintain health insurance, rules governing the operation of health insurance exchanges or marketplaces, and the availability of premium tax credits and cost-sharing reductions to low and moderate income individuals. Lastly, the Portfolio explains the notice and reporting obligations that accompany the ACA's substantive requirements governing employers.

This Portfolio may be cited as Bianchi,  332 T.M., Employer Shared Responsibility.


Alden J. Bianchi, Esq.

Alden J. Bianchi, B.S., Worcester Polytechnic Institute (1974); J.D., Suffolk Law School (1978); LL.M., Georgetown Law Center (1979); LL.M. (tax), Boston University School of Law (1984); Employee Benefits Committee of the American Bar Association Tax Section; Fellow American College of Employee Benefits Counsel; Massachusetts Bar (1978), Illinois and District of Columbia Bars (1979).

Table of Contents

Detailed Analysis
I. Introduction
II. Affordable Care Act Overview for Employers
Introductory Material
A. Insurance Market Reforms
B. Regulation of “Health Plans” and “Group Health Plans”
C. Retiree-Only Plan Carve-Out
D. American Health Benefit Exchanges
1. Eligibility for Qualified Health Plans
2. QHPs and Actuarial Value
a. Essential Health Benefits/Essential Health Benefit Package
b. Actuarial Value
c. Specified Out-of-Pocket and Deductible Limits
d. Ban on Deductible on Preventive Services
3. SHOP Exchanges
E. Individual Mandate
1. Premium Support
2. Cost-Sharing
F. Medicaid Expansion
III. Section 4980H — Employer Shared Responsibility
A. Basic Rule Under §4980H(a) and §4980H(b)
B. Applicable Large Employer
C. Employee
D. Full-Time Employees — General Rules
E. Full-Time Employees — Monthly Measurement Method
1. Monthly Measurement Method Mechanics
2. Use of Weekly Periods
3. Rehired Employees
4. International Transfers
F. Full-Time Employees — Look-Back Measurement Method
1. Employee Status Categories
a. Full-Time Employee
b. Part-Time Employee
c. Seasonal Employee
d. Variable Hour Employee
2. Testing New Full-Time Employees
3. Testing New Part-Time, Seasonal and Variable Hour Employees and Ongoing Employees
a. Testing Ongoing Employees
b. Testing New Variable Hour, New Seasonal, and New Part-Time Employees
4. Transition to Ongoing Employee Status
5. Rehired Employees
a. 26 Week/13 Week Rule
b. Rule-of-Parity
6. Special Unpaid Leave and Employment Break Periods
7. Unpaid Leaves of Absence (Other than Special Unpaid Leave)
8. Treatment of Continuing Employees
9. International Transfers
10. Application to Different Categories of Employees
G. Changes in Full-Time Employee Determination Method
1. Employees Transferring Between Positions with Different Measurement Periods
2. Employer-Initiated Changes in Measurement Methods
H. Limited Non-Assessment Periods
I. Section 4980H(a) Liability
J. Section 4980H(b) Liability
K. Offers of Coverage
L. Waiting Periods
M. Minimum Essential Coverage/Eligible Employer-Sponsored Plan
N. Affordability
O. Minimum Value
P. Sub-Minimum Value Plans
Q. Section 1411 Certifications
1. Questions Relating to Exchange Eligibility
2. Questions Relating to Employer Liability Under §4980H
R. Multiemployer Plans
S. Transition Relief and Interim Guidance
1. Transition Guidance in the Preamble to the Proposed Regulations
2. Transition Guidance for 2014 — Notice 2013-45
3. Section 125 Non-Calendar Year Guidance
4. Transition Guidance for 2015
a. Non-Calendar Year Plans
(1) Pre-2015 Eligibility Transition Guidance
(2) Significant Percentage Transition Guidance (All Employees)
(3) Significant Percentage Transition Relief (Full-Time Employees)
b. Shorter Measurement Periods Permitted for Stability Period Starting During 2015
c. Shorter Period Permitted for Determining Applicable Large Employer Status for 2015
d. Offer of Coverage for January 2015
e. Coverage for Dependents
f. 2015 Transition Relief for Applicable Large Employers with Fewer than 100 Full-Time Employees (Including FTEs)
(1) Limited Workforce Size
(2) Maintenance of Workforce and Aggregate Hours of Service
(3) Maintenance of Previously Offered Health Coverage
g. Limited 2015 §4980H(a) Transition Relief
h. Calculation of Assessable Payments Under §4980H(a) for Applicable Large Employers with 100 or More Full-Time Employees (Including FTEs) for 2015
i. Coordination with Other Transition Relief
5. Interim Guidance with Respect to Multiemployer Arrangements
T. Assessment and Collection of Employer Shared Responsibility Payment
IV. Section 4980H Compliance and Impact on Plan Design
Introductory Material
A. No Offer of Coverage
B. Making the Offer of Coverage
C. Making an Offer of Coverage — Examples
V. Reporting Relating to Minimum Essential Coverage (§6055)
Introductory Material
A. The Reporting Obligation
B. Information Reported to the Government
1. Required Information
2. Taxpayer Identification Numbers
C. Forms 1094-B and 1095-B and Accompanying Instructions
1. Form 1094-B, Transmittal of Health Coverage Information Returns
2. Form 1095-B, Health Coverage
D. Special Rules for Governmental Plans and Employers
E. Time and Manner for Filing the Return
F. Statements Provided to Responsible Individuals
G. Penalties
VI. Information Reporting by Applicable Large Employers
Introductory Material
A. The Basic Reporting Rule
B. Information Required to Be Reported
C. Forms 1094-C and 1095-C and Accompanying Instructions
1. Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
2. Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
D. Reporting for §4980H Transition Relief
1. 50-99 Transition Relief
2. 100 or More Transition Relief
3. 70% Offer Transition Relief
4. Dependent Coverage Transition Relief
5. Non-Calendar Year Plan Transition Relief
6. January 2015 Transition Relief
E. Rules Governing “Governmental Units”
F. Reporting Methods
1. The General Method
2. Alternative Reporting Methods
a. Reporting Based on Certification of Qualifying Offers (the “Qualifying Offer Method”)
b. 2015 Qualifying Offer Method Transition Relief
c. Option to Report Without Separate Identification of Full-Time Employees if Certain Conditions Related to Offers of Coverage Are Satisfied (98 Percent Offers)
G. Electronic Filing of Returns
H. Electronic Furnishing of Statements
I. Penalties
J. Reporting by Multiemployer Plans

Working Papers

Table of Worksheets
Worksheet 1 Health Care Reform Compliance Checklist for Plan Sponsors
Worksheet 2 The Final Code §4980H Regulations; Common Law Employees; and Offers of Coverage by Unrelated Employers
Worksheet 3 Health Care Reform Guide for Staffing Firms
Worksheet 4 Health Insurance Mandates Summary