The Internal Revenue Service (IRS) has issued proposed regulations on the shared responsibility for employers to provide health care coverage under the Affordable Care Act. The IRS noted that employers may rely on the proposed regulations for guidance until final regulations are issued. In addition, the IRS posted on its website a questions and answers document to explain the provisions and the new proposed regulations.

Under the provisions, if an employer does not offer its employees affordable health coverage that provides a minimum level of coverage, it may be subject to an Employer Shared Responsibility payment. Businesses that do not provide health insurance coverage may be subject to a penalty of $2,000 per employee per year if more than 30 employees receive the tax credit. Affordable coverage is coverage that does not cost a single employee more than 9.5 percent of his or her income. The amount may be greater for family coverage.

To be subject to the provisions, an employer must have at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees. A full-time employee is considered to be an individual employed on average at least 30 hours per week.

The Employer Shared Responsibility provisions go into effect on January 1, 2014, but employers will need to use information about workers employed in 2013 to determine whether they are subject to the provisions. An employer who meets the 50-employee threshold will be liable for an Employer Shared Responsibility payment if either of the following conditions apply:

      • The employer does not offer health coverage or offers coverage to less than 95 percent of its full-time employees and at least one full-time employee receives a tax credit to help pay for coverage from an insurance exchange.
      • The employer offers health coverage to at least 95 percent of its full-time employees, but at least one employee receives a tax credit to help pay for coverage on an insurance exchange because the employer did not offer coverage to that employee or the coverage offered was either unaffordable or did not meet the minimum value requirement.

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