In general, under the employer shared responsibility provisions, an applicable large employer (ALE) member may either offer affordable minimum essential coverage that provides minimum value to its full-time employees (and their dependents) or potentially owe an employer shared responsibility payment to the IRS.
- There are two potential employer shared responsibility payments. Whether the minimum essential coverage offered by an employer to its full-time employees is affordable and provides minimum value is relevant for the second type of employer shared responsibility payment. That payment applies if an ALE member offers minimum essential coverage to its full-time employees and their dependents but, despite that, at least one full-time employee receives the premium tax credit for purchasing coverage through the Health Insurance Marketplace. A full-time employee could receive the premium tax credit if the employee was offered minimum essential coverage that either was not affordable for that employee or did not provide minimum value.
An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan. See Notice 2014-69 for additional guidance regarding whether an employer-sponsored plan provides minimum value coverage if the plan fails to substantially cover in-patient hospitalization services or physician services. Under proposed regulations upon which taxpayers may rely, employers generally must use a minimum value calculator developed by HHS to determine if a plan with standard features provides minimum value. Plans with nonstandard features are required to obtain an actuarial certification for the nonstandard features. The proposed regulations also describe certain safe harbor plan designs that will satisfy minimum value.
- Regulations on the employer shared responsibility provisions
- Notice 2013-45, announcing transition relief for 2014
- Notice 2014-49, regarding a proposed approach to the application of the look-back measurement method in situations in which the measurement period applicable to an employee changes.
- Notice 2015-87, providing further guidance on the application of various provisions of the Affordable Care Act to employer-provided health coverage.
More information is also available in this fact sheet issued by the U.S. Department of the Treasury.