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.
