On January 27, 2014, the Internal Revenue Service (IRS) issued proposed regulations (“Proposed Regulations”, available here) clarifying the penalties imposed on nonexempt persons who fail to maintain minimum essential coverage as required by Internal Revenue Code (Code) Section 5000A. Very generally, Code Section 5000A requires nonexempt persons to either (1) maintain minimum essential coverage, or (2) make a shared responsibility payment. The Proposed Regulations:

1. explain which government-sponsored programs do not qualify as “government-sponsored minimum essential coverage”;
2. clarify that “minimum essential coverage” excludes health plans and programs that consist solely of “excepted benefits”;
3. clarify—for purposes of the “lack of affordable coverage” exemption—the required contribution for individuals eligible to enroll in an eligible employer-sponsored plan that provides employer contributions to health reimbursement arrangements (HRAs) or wellness program incentives;
4. expand the definition of hardship exemptions that may be claimed on a federal income tax return and provide additional guidance; and
5. clarify the computation of the monthly “shared responsibility payment” penalty amount.

Comments with respect to the Proposed Regulations are due by April 28, 2014, and a public hearing is scheduled for May 21, 2014.Continue Reading IRS Promulgates Clarifying Regulations Regarding Abstainer Penalties Under the ACA