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Internal Revenue Code, § 4980H. Shared Responsibility For Employers Regarding Health Coverage

I.R.C. § 4980H(a) Large Employers Not Offering Health Coverage
If—
I.R.C. § 4980H(a)(1)
any applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
I.R.C. § 4980H(a)(2)
at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
I.R.C. § 4980H(b) Large Employers Offering Coverage With Employees Who Qualify For Premium Tax Credits Or Cost-Sharing Reductions
I.R.C. § 4980H(b)(1) In General
If—
I.R.C. § 4980H(b)(1)(A)
an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
I.R.C. § 4980H(b)(1)(B)
1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and an amount equal to 1/12 of $3,000.
I.R.C. § 4980H(b)(2) Overall Limitation
The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
I.R.C. § 4980H(c) Definitions And Special Rules
For purposes of this section—
I.R.C. § 4980H(c)(1) Applicable Payment Amount
The term “applicable payment amount” means, with respect to any month, 1/12 of $2,000.
I.R.C. § 4980H(c)(2) Applicable Large Employer
I.R.C. § 4980H(c)(2)(A) In General
The term “applicable large employer” means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.
I.R.C. § 4980H(c)(2)(B) Exemption For Certain Employers
I.R.C. § 4980H(c)(2)(B)(i) In General
An employer shall not be considered to employ more than 50 full-time employees if—
I.R.C. § 4980H(c)(2)(B)(i)(I)
the employer's workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and
I.R.C. § 4980H(c)(2)(B)(i)(II)
the employees in excess of 50 employed during such 120-day period were seasonal workers.
I.R.C. § 4980H(c)(2)(B)(ii) Definition Of Seasonal Workers
The term “seasonal worker” means a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor, including workers covered by section 500.20(s)(1) of title 29, Code of Federal Regulations and retail workers employed exclusively during holiday seasons.
I.R.C. § 4980H(c)(2)(C) Rules For Determining Employer Size
For purposes of this paragraph—
I.R.C. § 4980H(c)(2)(C)(i) Application Of Aggregation Rule For Employers
All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as 1 employer.
I.R.C. § 4980H(c)(2)(C)(ii) Employers Not In Existence In Preceding Year
In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is an applicable large employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.
I.R.C. § 4980H(c)(2)(C)(iii) Predecessors
Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.
I.R.C. § 4980H(c)(2)(D) Application Of Employer Size To Assessable Penalties
I.R.C. § 4980H(c)(2)(D)(i) In General
The number of individuals employed by an applicable large employer as full-time employees during any month shall be reduced by 30 solely for purposes of calculating—
I.R.C. § 4980H(c)(2)(D)(i)(I)
the assessable payment under subsection (a), or
I.R.C. § 4980H(c)(2)(D)(i)(II)
the overall limitation under subsection (b)(2).
I.R.C. § 4980H(c)(2)(D)(ii) Aggregation
In the case of persons treated as 1 employer under subparagraph (C)(i), only 1 reduction under subclause (I) or (II) shall be allowed with respect to such persons and such reduction shall be allocated among such persons ratably on the basis of the number of full-time employees employed by each such person.
I.R.C. § 4980H(c)(2)(E) Full-Time Equivalents Treated As Full-Time Employees
Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.
I.R.C. § 4980H(c)(2)(F) Exemption For Health Coverage Under Tricare Or The Department Of Veterans Affairs
Solely for purposes of determining whether an employer is an applicable large employer under this paragraph for any month, an individual shall not be taken into account as an employee for such month if such individual has medical coverage for such month under—
I.R.C. § 4980H(c)(2)(F)(i)
chapter 55 of title 10, United States Code, including coverage under the TRICARE program, or
I.R.C. § 4980H(c)(2)(F)(ii)
under a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary.
I.R.C. § 4980H(c)(3) Applicable Premium Tax Credit And Cost-Sharing Reduction
The term “applicable premium tax credit and cost-sharing reduction” means—
I.R.C. § 4980H(c)(3)(A)
any premium tax credit allowed under section 36B,
I.R.C. § 4980H(c)(3)(B)
any cost-sharing reduction under section 1402 of the Patient Protection and Affordable Care Act, and
I.R.C. § 4980H(c)(3)(C)
any advance payment of such credit or reduction under section 1412 of such Act.
I.R.C. § 4980H(c)(4) Full-Time Employee
I.R.C. § 4980H(c)(4)(A) In General
The term “full-time employee” means, with respect to any month, an employee who is employed on average at least 30 hours of service per week.
I.R.C. § 4980H(c)(4)(B) Hours Of Service
The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
I.R.C. § 4980H(c)(5) Inflation Adjustment
I.R.C. § 4980H(c)(5)(A) In General
In the case of any calendar year after 2014, each of the dollar amounts in subsection (b) and paragraph (1) shall be increased by an amount equal to the product of—
I.R.C. § 4980H(c)(5)(A)(i)
such dollar amount, and
I.R.C. § 4980H(c)(5)(A)(ii)
the premium adjustment percentage (as defined in section 1302(c)(4) of the Patient Protection and Affordable Care Act) for the calendar year.
I.R.C. § 4980H(c)(5)(B) Rounding
If the amount of any increase under subparagraph (A) is not a multiple of $10, such increase shall be rounded to the next lowest multiple of $10.
I.R.C. § 4980H(c)(6) Other Definitions
Any term used in this section which is also used in the Patient Protection and Affordable Care Act shall have the same meaning as when used in such Act.
I.R.C. § 4980H(c)(7) Tax Nondeductible
For denial of deduction for the tax imposed by this section, see section 275(a)(6).
I.R.C. § 4980H(d) Administration And Procedure
I.R.C. § 4980H(d)(1) In General
Any assessable payment provided by this section shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
I.R.C. § 4980H(d)(2) Time For Payment
The Secretary may provide for the payment of any assessable payment provided by this section on an annual, monthly, or other periodic basis as the Secretary may prescribe.
I.R.C. § 4980H(d)(3) Coordination With Credits, Etc.
The Secretary shall prescribe rules, regulations, or guidance for the repayment of any assessable payment (including interest) if such payment is based on the allowance or payment of an applicable premium tax credit or cost-sharing reduction with respect to an employee, such allowance or payment is subsequently disallowed, and the assessable payment would not have been required to be made but for such allowance or payment.
(Added by Pub. L. 111-148, Sec. 1513, 10106, 10108, Mar. 23, 2010, 124 Stat. 119; and amended by Pub. L. 111-152, Sec. 1003, Mar. 30, 2010, 124 Stat. 1029; Pub. L. 112-10, Sec. 1858(b)(4), Apr. 15, 2011, 125 Stat. 38; Pub. L. 114-41, title IV, Sec. 4007(a)(1), July 31, 2015, 129 Stat. 443; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(2)(B), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018--Subsec. 4980H(c)(2)(F). Pub. L. 115-141, Sec. 401(a)(2)(B) substituted “Department of Veterans Affairs” for “Veterans Administration”.
2015 - Subsec. (c)(2)(F). Pub. L. 114-41, Sec. 4007(a)(1), amended par. (2) by adding subpar. (F).
2011 - Subsec. (b)(3). Pub. L. 112-10, Sec. 1858(b)(4), struck par. (3), effective as if it had never been enacted. Before being struck, it read as follows:
“(3) Special Rules For Employers Providing Free Choice Vouchers.—No assessable payment shall be imposed under paragraph (1) for any month with respect to any employee to whom the employer provides a free choice voucher under section 10108 of the Patient Protection and Affordable Care Act for such month.”
2010 - Subsec. (b). Pub. L. 111-152, Sec. 1003(d), struck subsec. (b). Before being struck, it read as follows:
“(b) Large Employers With Waiting Periods Exceeding 60 Days.—
“(1) In General.—In the case of any applicable large employer which requires an extended waiting period to enroll in any minimum essential coverage under an employer-sponsored plan (as defined in section 5000A(f)(2)), there is hereby imposed on the employer an assessable payment of $600 for each full-time employee of the employer to whom the extended waiting period applies.
“(2) Extended Waiting Period.—The term “extended waiting period” means any waiting period (as defined in section 2701(b)(4) of the Public Health Service Act) which exceeds 60 days.”
Subsec. (c)-(e). Pub. L. 111-152, Sec. 1003(d), redesignated subsec. (c)-(e) as subsec. (b)-(d), respectively.
Subsec. (c)(1) (before redesignation). Pub. L. 111-152, Sec. 1003(b)(1), amended par. (1) by substituting “an amount equal to 1/12 of $3,000” for “400 percent of the applicable payment amount” in the flush text following subsec. (c)(1)(B).
Subsec. (d)(1) (before redesignation). Pub. L. 111-152, Sec. 1003(b)(2), amended par. (1) by substituting “$2,000” for “$750”.
Subsec. (d)(2)(D) (before redesignation). Pub. L. 111-152, Sec. 1003(a), amended subpar. (D). Before amendment it read as follows:
“(D) Application To Construction Industry Employers.—In the case of any employer the substantial annual gross receipts of which are attributable to the construction industry—
“(i) subparagraph (A) shall be applied by substituting “who employed an average of at least 5 full-time employees on business days during the preceding calendar year and whose annual payroll expenses exceed $250,000 for such preceding calendar year” for “who employed an average of at least 50 full-time employees on business days during the preceding calendar year”, and
“(ii) subparagraph (B) shall be applied by substituting “5” for “50”.”
Subsec. (d)(2)(E) (before redesignation). Pub. L. 111-152, Sec. 1003(c), amended par. (2) by adding subpar. (E).
Subsec. (d)(5)(A) (before redesignation). Pub. L. 111-152, Sec. 1003(b)(3), amended subpar. (A) by substituting “subsection (b) and paragraph (1)” for “subsection (b)(2) and (d)(1)”.
Subsec. (b). Pub. L. 111-148, Sec. 10106(e), amended subsec. (b). Before amendment, it read as follows:
‘’(b) LARGE EMPLOYERS WITH WAITING PERIODS EXCEEDING 30 DAYS.—
‘’(1) IN GENERAL.—In the case of any applicable large employer which requires an extended waiting period to enroll in any minimum essential coverage under an employer-sponsored plan (as defined in section 5000A(f)(2)), there is hereby imposed on the employer an assessable payment, in the amount specified in paragraph (2), for each full-time employee of the employer to whom the extended waiting period applies.
‘’(2) AMOUNT.—For purposes of paragraph (1), the amount specified in this paragraph for a full-time employee is—
‘’(A) in the case of an extended waiting period which exceeds 30 days but does not exceed 60 days, $400, and
‘’(B) in the case of an extended waiting period which exceeds 60 days, $600.
‘’(3) EXTENDED WAITING PERIOD.—The term ‘extended waiting period’ means any waiting period (as defined in section 2701(b)(4) of the Public Health Service Act) which exceeds 30 days.”
Subsec. (c)(3). Pub. L. 111-148, Sec. 10108(i)(1)(A), amended subsec. (c) by adding par. (3).
Subsec. (d)(2)(D). Pub. L. 111-148, Sec. 10106(f)(2), amended par. (2) by adding subpar. (D).
Subsec. (d)(4)(A). Pub. L. 111-148, Sec. 10106(f)(1), amended par. (4) by inserting ‘’, with respect to any month,” after “means”.
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-141, Sec. 401(a)(2)(B), effective March 23, 2018.
EFFECTIVE DATE OF 2015 AMENDMENT
Amendment by Sec. 4007(a)(1) of Pub. L 114-41 effective for months beginning after December 31, 2013.
EFFECTIVE DATE OF 2011 AMENDMENT
Amendment by Sec. 1858(b) of Pub. L. 112-10 effective as if included in the provisions of, and the amendments made by, the provisions of the Patient Protection and Affordable Care Act [Pub. L. 111-148] to which they relate [Effective Date: Months beginning after December 31, 2013].
EFFECTIVE DATE OF 2010 AMENDMENTS
Amendment by Sec. 1003 of Pub. L. 111-152 effective on the date of the enactment of this Act [Enacted: Mar. 30, 2010].
Amendment by Sec. 10106(e) and (f)(1) of Pub. L. 111-148 effective on the date of the enactment of this Act [Enacted: Mar. 23, 2010].
Amendment by Sec. 10106(f)(2) of Pub. L. 111-148 effective for months beginning after December 31, 2013.
Amendment by Sec. 10108(i)(1)(A) of Pub. L. 111-148 effective for months beginning after December 31, 2013.
STUDY AND REPORT OF EFFECT OF TAX ON WORKERS' WAGES
Section 1513(c) of Pub. L. 111-148 provided:
“(c) STUDY AND REPORT OF EFFECT OF TAX ON WORKERS' WAGES.—
“(1) IN GENERAL.—The Secretary of Labor shall conduct a study to determine whether employees' wages are reduced by reason of the application of the assessable payments under section 4980H of the Internal Revenue Code of 1986 (as added by the amendments made by this section). The Secretary shall make such determination on the basis of the National Compensation Survey published by the Bureau of Labor Statistics.
“(2) REPORT.—The Secretary shall report the results of the study under paragraph (1) to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate.”
EFFECTIVE DATE
Effective for months beginning after December 31, 2013.