IRS Working on ACA Regulation ‘Pot Luck'

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By Kristen Ricaurte Knebel

Oct. 20 — The IRS and Treasury Department have quite a few big ticket items on their agenda, but they're also working on a regulatory “pot luck” of sorts, involving smaller changes to Affordable Care Act regulations, agency officials said.

One such regulation has to do with squaring the employer shared-responsibility regulations under tax code Section 4980H with Internal Revenue Service guidance released in 2014 that indexed calculations on whether an employer's offer of health-care coverage is affordable to employees, Kathryn Johnson, an attorney adviser with the Treasury Department's Office of Benefits Tax Counsel, said Oct. 20. Johnson and others spoke at a conference sponsored by the American Bar Association Joint Committee on Employee Benefits.

Employees are only eligible for a premium tax credit if their employer's offer of coverage is more than 9.5 percent of household income, she said. Revenue procedures 2014-37 and 2014-62 adjusted that number for 2015 and 2016, but the final rules under Section 4980H don't include room for adjustments, she said.

All this really means is that every instance in the 4980H regulations that reference 9.5 percent need to be changed to say 9.5 percent “as indexed,” said Stephen B. Tackney, deputy associate chief counsel in the IRS's Office of Chief Counsel.

Johnson said the IRS intends to issue guidance to provide “clarity.”

Minimum Value 

Comments are due Nov. 2 on the IRS's proposed rules that would prevent employers from not offering in-patient hospitalization or physician services if they want to continue to meet the ACA's minimum value standard.

Under the proposed rules, eligible employer-sponsored health plans will be considered to provide minimum value coverage only if the plan's share of total allowed costs of benefits provided to an employee is at least 60 percent and the plan includes substantial coverage of inpatient hospital and physician services.

The Department of Health and Human Services “has already proposed and finalized their related regulations. So I would imagine our final regulations on this would close the loop” on the issue, Johnson said.

Tackney added that employers shouldn't look at the guidance as setting out the “absolute, bare minimum that you have to provide.”

“I don't know if a lot of people are thinking that way. I'm just not sure that's the most productive way to think about this issue,” Tackney said.

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

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

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