The AICPA hosted a webinar on the provisions of T.D. 9655, final regulations that were issued on February 10 and implement employer shared responsibility provisions under the Affordable Care Act for 2015.
The webinar, presented on February 27, featured J. Mark Iwry, senior advisor to the Secretary of the Treasury and deputy assistant secretary for retirement and health policy at the Treasury Department; Alan Tawshunsky, special counsel in the Office of the Benefits Tax Counsel at the Treasury Department; and Deborah Walker, CPA, national director of compensation and benefits at Cherry Bekaert, LLP. The presentation was moderated by Kristin Esposito, CPA, MST, technical manager of taxation at the AICPA.
The presentation covered transition rules that phase in the pay-or-play penalties during 2015 and 2016.
Notice 2013-45, issued in July of 2013, provided that no assessable shared responsibility penalties will apply for 2014. Likewise, information reporting for insurers, self-insured employers and certain other providers of minimum essential coverage under Code section 6055 will not apply for 2014,and information reporting for employers with more than 50 full-time employees (including FTEs) under Code section 6056 will not apply for 2014.
The rules affect applicable large employers, generally meaning, for each year, employers that had 50 or more full-time employees, including full-time equivalent employees, during the prior year. Under Section 4980H of the Tax Code, employers with more than 50 full-time employees (including full-time equivalent employees) must offer health care coverage to employees that is affordable and provides minimum value, or pay a penalty if an employee purchases insurance on the exchange and receives a subsidy or credit.
The penalty is (a) $2,000 times the number of all full-time employees, less 30 if minimum essential coverage is not offered to employees and their dependents, or (b) $3,000 for each full-time employee who purchases insurance from the exchange that is subsidized and who is not offered minimum essential coverage that is affordable and provides minimum value, but not more than the (a) penalty.
The presenters emphasized that the (a) and (b) penalties are mutually exclusive. A question was posed as to whether, if no (a) penalty applies, since the (b) penalty cannot exceed the (a) penalty, is there therefore no (b) penalty? The panel explained that the operating principle is what the (a) penalty would have been had the employer been subject to the (a) penalty.