EBIA Weekly Newsletter

IRS Information Letters Address Effect of Executive Order on Employer Shared Responsibility and Individual Mandate

   August 10, 2017

IRS Information Letters 2017-0010 (Apr. 14, 2017), 2017-0011 (Apr. 7, 2017), 2017-0013 (Apr. 14, 2017), and 2017-0017 (June 20, 2017)

The IRS’s Office of Chief Counsel has released four information letters on employer shared responsibility and the individual mandate under the Affordable Care Act (ACA). Here are highlights:

  • No Waivers Under Code § 4980H. Letters 2017-0010 and 2017-0013 respond to inquiries about the application of the employer shared responsibility requirements under Code § 4980H. As background, if an employer is an “applicable large employer” (i.e., it employed an average of 50 or more full-time employees (or equivalents) in the preceding calendar year), it is subject to potential penalties for failure to offer adequate health coverage to its full-time employees and dependents. The letters emphasize that no waivers are available under Code § 4980H, including for financial or religious reasons. They note that the executive order directing agency heads with responsibility under the ACA to minimize the law’s “unwarranted economic and regulatory burdens” (see our Checkpoint article) did not change the ACA, and that the ACA remains in force until changed by Congress. [EBIA Comment: Although unrelated to Code § 4980H, Letter 2017-0010 includes a reminder that an accommodation process is available to qualifying employers with religious objections to providing certain contraceptive coverage without cost-sharing under the ACA’s preventive services requirement. An executive order also directs the agencies to consider amending the preventive services regulations to address conscience-based objections to the contraceptive coverage mandate—see our Checkpoint article).]
  • Individual Mandate Continues to Apply. Letters 2017-0011 and 2017-0017 respond to questions about the individual shared responsibility requirements (also referred to as the individual mandate) under Code § 5000A. The letters explain that the law requires individuals to maintain minimum essential coverage for each month, qualify for a coverage exemption, or pay a penalty when filing their federal income tax return. Similar to the employer shared responsibility letters, these letters state that the executive order directing the agencies to minimize the ACA’s burdens does not change the application of the individual mandate, and taxpayers remain required to follow the ACA.

EBIA Comment: While the information letters do not break any new ground, they provide an important reminder that notwithstanding legislative efforts to repeal and replace, or administrative action to otherwise modify certain provisions of the ACA (including employer shared responsibility and the individual mandate), these requirements remain in place for now. For more information, see EBIA’s Health Care Reform manual at Sections XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”) and XXIX (“Shared Responsibility for Individuals (Individual Mandate)”).

Contributing Editors: EBIA Staff.