Treasury, IRS Request Comments on Shared Responsibility Provisions of Health Care Law

The Treasury Department and Internal Revenue Service requested public comment May 3 on issues relating to the shared responsibility provisions included in the health reform law that will apply to certain employers starting in 2014.

Notice 2011-36 solicits public input and comment on several issues that will be the subject of future proposed guidance as Treasury and IRS work to provide information to employers on how to comply with the shared responsibility provisions, IRS said.

Under the Patient Protection and Affordable Care Act, employers with 50 or more full-time employees that do not offer affordable health coverage to their full-time employees may be required to make a shared responsibility payment. The law specifically exempts small firms that have fewer than 50 full-time employees. The provision takes effect in 2014.

IRS solicited public input and comment on possible approaches employers could use to determine who is a full-time employee.

“The definition of full-time employee is key in determining whether, and, if so, to what extent, an employer may incur Section 4980H(a) liability or Section 4980H(b) liability,” the notice said.

Employers have asked for guidance on this provision, and a number of stakeholders groups have approached Treasury and IRS with information and initial suggestions, IRS said in News Release IR-2011-50.

Coordinated Approach With Labor, HHS.

Consistent with the coordinated approach that the departments of Treasury, Labor, and Health and Human Services are taking in developing the regulations and other guidance under PPACA, the notice also solicits input on how the three departments should interpret and apply the law's provisions limiting the ability of plans and issuers to impose a waiting period for health coverage of longer than 90 days starting in 2014.

The notice invites comment on how guidance under the 90-day provisions should be coordinated with the rules Treasury and IRS will propose regarding the shared responsibility provisions.

IRS said the request for comment is designed to ensure that Treasury and IRS continue to receive broad input from stakeholders on how best to implement the shared responsibility provisions.

Comments were invited on a number of possible rules, definitions, and approaches for interpreting and applying Section 4980H, including hours of service. Other sections of the notice describe a possible method for determining whether an employer is an applicable large employer for a calendar year, and thereby subject to Section 4980H.

Possible Rules Outlined.

The notice also outlines possible rules that could be used to determine an employee's full-time status for purposes of calculating an employer's assessable payment under Section 4980H. Finally, it asks for more general comments on the interaction of the rules under Section 4980H with certain other provisions of PPACA.

For instance, IRS said in the interest of simplicity and consistency, it is contemplating that definitions of employer, employee, and hours of service and the rules for calculating hours of service would generally conform, to the extent consistent with the provisions and purposes of Section 4980H, to well-established regulatory definitions and rules applicable to employer-provided health and pension benefits.

“Employee” as under the tax code generally would mean a worker who is an employee under the common-law test. An employer would mean the entity that is the employer of an employee under the common-law test. For hours of service, the IRS is contemplating the proposed rules would provide at least 30 hours of service per week.

The notice does not constitute guidance, the IRS warned. Instead, it describes potential approaches, which could be incorporated in future proposed rules, to certain discrete issues under Section 4980H, particularly the issue of who is a full-time employee. Treasury and IRS intend to publish proposed rules on that section, issues addressed in the notice, and on a broader set of issues under Section 4980H.

The three departments are coordinating their efforts in developing the rules and other guidance on the shared employer responsibility provision, the 90-day limitation period on waiting, automatic enrollment for employees of large employers (which relates to Department of Labor guidance), and other PPACA provisions, IRS said.

Comments must be submitted by June 17.

Notice 2011-36 will appear in Internal Revenue Bulletin 2011-21 on May 23.

More information is available at