On Dec. 16, 2015, the Internal Revenue Service (IRS) issued Notice 2015-87 to address how certain provisions under the Affordable Care Act (ACA) apply to employer-provided health coverage.
The notice covers the ACA’s market reforms as well as the employer shared responsibility rules and related reporting requirements.
Key provisions of the notice include:
- Confirmation of adjusted employer shared responsibility penalty amounts. For 2015, the adjusted penalty amounts are $2,080 and $3,120. For 2016, the adjusted penalty amounts are $2,160 and $3,240. The IRS anticipates that adjustments for future years will be posted on the IRS.gov website.
- Application of the adjusted affordability percentage to the affordability safe harbors under the employer shared responsibility rules. The adjusted amounts are 9.56 percent for 2015 and 9.66 percent for 2016.
- Clarification on how the employee contribution for coverage is calculated. The IRS has provided information on how the cost is affected by HRA and flex contributions, opt-out payments and Service Contract Act/Davis-Bacon Act fringe benefits.
The guidance provided in Notice 2015-87 generally applies for plan years beginning on or after Dec. 16, 2015. However, taxpayers may apply this guidance for all prior periods, and transition relief is available for some rules.