Pay or Play Rules-Dependent Coverage Requirement

Health Care Reform bulletinOn May 13, 2014, the IRS updated its Questions and Answers on the Employer Shared Responsibility Provisions to include further clarification and information for employers. Notably, these Q&As address consequences under the employer shared responsibility rules for applicable large employers that offer health insurance coverage to all full-time employees, but do not offer dependent coverage. In general, an applicable large employer will potentially be liable for a penalty only if:

• The employer does not offer health coverage to the dependents of its full-time employees (as well as to those full-time employees themselves); and
• At least one of its full-time employees receives a subsidy for purchasing individual coverage through an Exchange.

Whether or not one or more of its full-time employees’ dependents enrolls through an Exchange and receives a subsidy does not affect an employer’s liability. The FAQs also noted that transition relief is available with respect to offering dependent coverage in 2015.  This Pay or Play – Penalties for Failing to Offer Dependent Coverage Health Care Reform Bulletin provides an overview of the FAQs.