On May 20, 2013, the Wall Street Journal noted that many employers were responding to the Employer Shared Responsibility Payment (the employer mandate) under Health Care Reform by looking to implement "low-benefit plans" for low-wage employees. These "skinny" employer plans would provide coverage for a few doctor's office visits, as well as preventive care or procedures, but might omit coverage for surgery, laboratory tests and X-rays, or emergency room care. In the period before IRS Notice 2013-45 delayed the employer mandate, "skinny plans" or "low-cost" plans were a subject of widespread interest and discussion. As the employer mandate shifted to 2015, journalists and the public moved on to the next health care reform story: the first open enrollment in the Health Insurance Exchanges.
While "skinny" plans may have faded from public view with the delay of the employer mandate, they are still worth examining. Even if employers are not scrambling to design "skinny" plans, as seemed to be the story in 2013, the "skinny" plan provides some insight into what Health Care Reform has, and has not, accomplished or provided for lower wage employees in full-time jobs. As conceived, a "skinny" plan allows an employer to save on health care costs by wagering that the cost of these plans that offer minimal coverage, plus any exposure to Employer Shared Responsibility penalties, will be less than the cost of offering Insurance Exchange comparable plans.
The initial reporting on "skinny" plans elicited a basic analysis of their legal status. In short, "skinny" plans can work, as far as the law of Health Care Reform is concerned. First, "skinny" plans satisfy the requirements of minimum essential coverage within the meaning of Health Care Reform. Second, "skinny" employer health plans provide sufficient health coverage to meet the requirements of the "individual mandate" and circumvent liability for the Individual Shared Responsibility assessable payment under section 5000A of the Internal Revenue Code. Likewise, an employer could meet its obligation to offer minimum essential coverage to all its full-time employees by offering a "skinny" health plan, and therefore avoid liability for the Employer Shared Responsibility assessable payment, or "no offer" penalty under I.R.C. §4980H(a). Finally, however, a "skinny" health plan that did not meet statutory minimum value requirements would expose the offering employer to an alternative assessable payment, or "free rider" penalty under I.R.C. §4980H(b).1
These legal conclusions remain substantially unchanged. Under Health Care Reform, employer-sponsored health plans are considered minimum essential health benefit coverage regardless of whether the employer plan provides the essential health benefits (EHB) required in every plan offered on a Health Insurance Exchange.2Likewise, an employer plan may constitute minimum essential coverage even if it does not provide minimum value, as defined in the statute.3
What Have We Learned Since Last Year: Demand for "Skinny Plans"
The primary motive behind "skinny" plans for employers was and is economic, rather than legal. Thus, before reviewing the legal issues applicable to "skinny" plans, we will discuss some of the economic considerations motivating statutory large employers' interest in "skinny" plans. "Skinny" plans that do not provide minimum value allow a large employer to avoid the §4980H(a) "no-offer" assessable payment of $2,000, assessed with respect to its entire full-time employee population. However, a health plan that does not provide minimum value cannot change a large employer's exposure to the §4980H(b) assessable "free rider" "tax" of $3,000. The $3,000 payment is assessable with respect to each full-time employee who receives a premium tax credit for health coverage purchased on an Exchange, subject to a maximum amount equivalent to the amount the employer would owe if the §4980H(a) penalty were assessable.
The first economic proposition supporting the "skinny" health plan is that the amount of a large employer's §4980H(b) assessment cannot exceed the amount of its §4980H(a) assessment. From this perspective, there is no economic downside to offering a "skinny" health plan. For example, the most an employer with 500 employees could owe in §4980H(a) "no-offer" payments is $940,000, $2000 for each of the 500 employees, less 30. To reach that amount with a "skinny" plan, 313 of the employer's 500 employees would have to decline the "skinny" plan coverage and receive a premium tax credit for Exchange-purchased coverage. (Dividing the $940,000 "no-offer" assessment by the $3000 payable for each "free rider" assessment yields 313 1/3, the breakeven point.)
"Skinny" plan proponents have higher hopes for their product. Specifically, the potential savings in "skinny" plans materialize only if a substantial number of employees choose the "skinny" plan over Exchange-purchased coverage, or employer coverage that meets minimum value and affordability standards. The expectation is that a large number of lower-wage employees will be drawn to "skinny" plans because the employee will pay a much smaller premium than would be charged for Exchange equivalent plans. In the example of the 500-employee large employer above, a "skinny" plan that induced only 30 tax-credit-eligible employees to purchase Exchange coverage would result in an assessment of $90,000, less than a tenth of the potential $940,000 penalty for failure to offer minimum essential coverage.
However, the 2014 open enrollment period on the Exchanges suggests that individuals, including low-wage employees not previously covered under employer plans, may seek out coverage on the Exchanges in greater numbers than "skinny" plan proponents expect. As described below, an employer's offer of a "skinny" health plan has no impact on an employee's income-based eligibility for a premium tax credit toward Exchange-purchased insurance, no matter how little the employee is required to contribute toward the cost of the "skinny" plan coverage. Ultimately, the value of the "skinny" health plan strategy is inversely proportional to the willingness of employees to purchase Exchange coverage, or to pay the employee share of premium on higher-value, affordable employer-sponsored coverage. Offering a "skinny" health plan as the single option available to lower-income employees makes sense for an employer whose employees place a very low value on health insurance coverage, specifically, a value lower than their cost for Exchange coverage after application of the premium tax credit.
In the 2014 open enrollment period, "more than 5.4 million" people enrolled in coverage through the federally facilitated Exchange.4 Total Exchange-based enrollment represented approximately 8 million people,5 although the number of people covered under Exchange-purchased insurance remains unknown.6 On the Federally facilitated Exchange, 87 percent of enrollments through May 12, 2014 included a premium tax credit; the estimate for all exchanges is 85 percent.7 On the Federally facilitated exchange, the average monthly premium, after tax credits, was $68 for Bronze coverage and $69 for Silver coverage. In addition, "69 percent of individuals who selected Marketplace plans with tax credits . . . had premiums of $100 or less after tax credits--46 percent had premiums of $50 or less after tax credits."8
These open enrollment data show that approximately 6.8 million lower and middle income people took advantage of the premium tax credit, and as many as 3.1 million of them (46 percent) may pay monthly premiums of $50 or less after the premium tax credit. Based on the structure of the premium tax credit, all of the 2014 enrollees paying premiums of $50 or less per month have income that is at least at the Federal poverty level, but less than 150 percent of the poverty level. Presumably, this is the target population for "skinny" plans: low-wage employees.
The open enrollment data do not clearly show how the addition of a "skinny" plan, with monthly premium contributions potentially lower than the Exchange plan, would affect the decision making of lower-wage employees. It is possible that only those lower income individuals who place a high value on health coverage enrolled in Exchange coverage, and that some enrolled only to avoid the Individual Shared Responsibility payment. There may, still, be a "skinny" plan cohort in 2015, enrolling in minimal employer-sponsored coverage as the lowest-cost method of satisfying the individual mandate.
What the open enrollment data do show, however, is that a substantial number of people in the target population for "skinny" plans have already enrolled in Exchange-purchased coverage. The assumption needed to support the "skinny" plan is that, given the choice, lower-wage employees will choose a "skinny" plan over an Exchange-purchased plan based on a difference of less than $50 a month, possibly substantially less than $50 a month.9 The fact that a substantial group of low-income employees has already enrolled in Exchange-purchased coverage suggests that "skinny" plans may not reduce large employers' §4980H(b) exposure as much as hoped. "Poor people won't pay for health insurance" is a sociological assumption, not tax advice.
Employer-Sponsored Coverage without Penalties: Statutory Constraints
Large employers seeking a more cautious counterpoint to a "skinny" health plan must observe the constraints of the employer mandate, I.R.C. §4980H. As practitioners know, the employer mandate is two separate excise tax penalties: §4980H(a) imposes a "no-offer" assessment of $2,000 per full-time employee for a large employer that "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." The "no-offer" assessment is assessable on a large employer's entire full-time workforce,10 provided that at least one such employee receives a premium tax credit for purchasing health coverage on an exchange. A second excise tax under §4980H(b), the "free rider" assessment, is assessable in the amount of $3000, only with respect to full-time employees who receive premium tax credits for exchange-purchased health coverage because employer-sponsored coverage is not affordable, or does not provide minimum value, under § 36B(c)(2)(C).
As commenters on "skinny" plans have noted, the requirement to make an offer of minimum essential coverage does not present a substantial hurdle for an employer contemplating a "skinny" health. Minimum essential coverage includes coverage under any "eligible employer-sponsored plan." Such a plan, in turn, is defined as "a group health plan or group health insurance coverage offered by an employer to an employee," including any governmental plan or "any other plan or coverage offered in the small or large group market."11
The statute and regulations provide limited guidance as to minimum requirements for an employer-sponsored benefit to be a group health plan. A group health plan does not include products that provide only incidental coverage for medical costs, such as liability insurance, or plans or insurance that excludes major medical expenses, such as dental or vision coverage or long-term care insurance.12 The most substantial restriction on group health plans, for the purpose of identifying an employer offering as minimum essential coverage, is that it does not include coverage for only a specific disease (such as cancer insurance), or hospital indemnity or other fixed indemnity insurance.13
Typically, hospital indemnity insurance pays a fixed amount directly to the insured for each day or period of hospital confinement. The preamble to early proposed regulations relating to the identification of employer-sponsored plans as minimum essential coverage noted that hospital indemnity or fixed indemnity insurance cannot be minimum essential coverage.14
In general, §4980H(a) does not bear directly on the design of employer-sponsored health coverage. Its importance is that employers must offer coverage to all full-time employees, even those employees who have other options, such as Medicaid, for health coverage. Still, it bears noting that subsequent regulation could reduce large employers' ability to offer "skinny" health plans. For example, one approach employers may adopt in designing "skinny" health plans is the use of limits, other than annual or lifetime limits, on certain health benefits--for example, limiting reimbursement to $100 per emergency room visit. On its face, such a benefit may not be "fixed indemnity" in that it is possible, if extremely unlikely, for the cost of an emergency room visit to be less than $100, resulting in the payment of a benefit in an amount other than $100. There appears to be no present risk that an employer-sponsored plan that includes extremely low benefit limits will be characterized as fixed indemnity, and therefore not minimum essential coverage. Another approach in designing "skinny" plans is the exclusion of coverage for substantial categories of medical expense; subsequent regulation could determine that coverage with excessive exclusions did not even constitute health coverage. Such regulatory changes, though possible, have no immediate bearing on the design of employer-sponsored health coverage.
The more substantial concern for employers that do offer health coverage, "skinny" or otherwise, are the affordability and minimum value requirements of §4980H(b). Some large employers, for example, may seek to eliminate exposure to §4980H(a) penalties by offering employer-sponsored coverage that is not affordable to all employees, or coverage that does not provide minimum value (the "skinny" plan).
The two components of §4980H(b), affordability and minimum value, operate to fix the employer's minimum cost for providing health care for an employee with household income less than four times the poverty level without any §4980H assessment. (No §4980H(b) assessment is possible with respect to employees who could not receive a premium tax credit for exchange coverage due to higher incomes.) The minimum value requirement indirectly establishes the minimum per-employee expenditure for health coverage necessary to avoid §4980H(b) assessment. The affordability requirement limits the employer's ability to share the cost of employer-sponsored coverage with employees to 9.5 percent of the employee's household income.
Employer-sponsored plans are affordable as long as the employee's required contribution toward premium costs is 9.5 percent or less of the employee's household income. Employers may take advantage of three regulatory safe harbors in determining the affordability of employer-sponsored plans. As set forth below, under these safe harbors, an employer is not subject to §4980H(b) payments with respect to an employee, even if the employee does receive a premium tax credit for exchange-purchased individual coverage. Although §4980H(b) affordability is fundamentally individual, being measured by the household income of each employee, the safe harbors must be applied "on a uniform and consistent basis for all employees" who are members of a "reasonable category of employees."
Although only described in connection with the three safe harbors, the regulations introduce an important benchmark: "the employer's lowest cost self-only coverage that provides minimum value." Although lowest cost coverage is not identified specifically as the basis for determining affordability outside the three safe harbors, it is reasonable to expect that such coverage will be used as the basis for determining affordability where an employer does not meet one of the safe harbors with respect to an individual employee, for example, because the employer has not identified the employee as a member of a reasonable category of employees.
The safe harbors are as follows:
- W-2 Wages: An employee's required annual contribution does not exceed 9.5 percent of the employee's Form W-2 wages from the employer for the calendar year.
- Rate of pay: In the case of an hourly employee, the employee's required contribution for any month may not exceed 9.5 percent of an amount equal to 130 hours, multiplied by the employee's lowest hourly rate of pay. In the case of a non-hourly employee, the employee's required contribution for the calendar month may not exceed 9.5 percent of the employee's monthly salary, as of the first day of the plan year.
- Federal poverty line: An employee's required monthly contribution may not exceed 9.5 percent of the federal poverty line for a single individual divided by 12.
For 2014, had the employer mandate been in effect, the federal poverty line safe harbor would have rendered employer-sponsored coverage affordable with any monthly employee contribution up to $92.39.
Under another component of § 4908H(b), minimum value, an employer-sponsored plan's "share of the total allowed costs of benefits provided under the plan" must be at least 60 percent. The rules for determining minimum value are provided through regulations under the Public Health Service Act, 45 C.F.R. § 156.145.15 Under these regulations, the value of employer-sponsored coverage is a percentage identified by dividing the plan's "anticipated covered medical spending for benefits provided under a particular essential health benefits (EHB) benchmark plan," divided by "the total anticipated allowed charges for EHB coverage" provided to a standard population.16
The Health and Human Services Department (HHS) has prepared a spreadsheet calculator for determining the value of health coverage for purposes including determining whether employer-sponsored health coverage provides minimum value for purposes of §4980H(b).
One concern regarding all employer-sponsored health coverage under Health Care Reform has been the fact that employer-sponsored coverage (other than coverage offered in the small group market) is not directly required to offer statutorily-defined essential health benefits (the EHB identified in the minimum value proposed regulations). Specifically, the concern was that an employer-sponsored plan could eliminate major components of coverage available through qualified health plans offered through health insurance exchanges. However, the use of essential health benefits as the base over which minimum value is calculated should substantially limit the ability of an employer to offer coverage with minimum value while omitting substantial components of coverage altogether. Although a minimalist plan may omit portions of the EHB package, substantial omissions will result in a plan that does not provide minimum value. Like employer plans, the Bronze tier of qualified health plans available through the exchanges are benchmarked at 60 percent of the projected cost of the EHB package. Therefore, Bronze qualified health plans provide some approximation of the level and type of benefits that employer-sponsored minimalist health plans may include.
Summary of §4980H Considerations
As discussed above, the exposure of employers adopting "skinny" health plans that do not provide minimum value is a matter of chance. A large employer's employer-sponsored coverage must meet minimum value standards in order for the employer reliably to avoid exposure to §4980H(b) assessment. (Employers may, of course, offer both a "skinny" plan and an affordable, minimum value plan.)
Due to the way minimum value for employer-sponsored plans is defined, such plans should be roughly similar in cost and in benefits offered to Bronze qualified health plan coverage available through health care exchanges. In the Federally facilitated Exchange, the average monthly premium for Bronze coverage for 2014 is $289, an annual rate of $3,468,17 although we would expect many large employers to be able to purchase or provide group health coverage at a cost equal to or below the average cost for individual, Exchange-purchased coverage. For a profitable employer taxable at 35 percent, a deductible premium payment of $3,500 would reduce tax by $1,225, resulting in an after-tax cash -flow impact of $2,275. In addition, the smallest safe harbor employee contribution for affordable coverage in 2014 is $92.39 per month, or $1,108.68 annually. Therefore, we would expect the final cost to a large employer for providing minimum-value health coverage to fall between $2,275 per employee (without any employee contributions) and $1,167 per employee (with employee contributions based on Federal poverty level safe harbor).
By comparison, assessments under §4980H are not tax-deductible under §4980H(c)(7). Therefore, the impact of each employee who declines a large employer's "skinny" health plan is $3,000. This scenario provides a general sense of what is required for a "skinny" plan to make economic sense for an employer. Assuming after-tax costs of $1,167 for each employee in a minimum value plan, and $3000 for each employee who declines "skinny" plan coverage to obtain a tax credit for Exchange coverage, a large employer offering a "skinny" plan needs 61 percent of employees to accept "skinny" plan coverage, rather than take the premium tax credit for exchange coverage, for the "skinny" plan to cost less than offering universally-accepted minimum value coverage.
What Have The Regulators Done Since 2013?
Under I.R.C. § 36B(c)(2)(C)(iii), employees who enroll in an employer's "skinny" plan are not eligible to receive the premium tax credit for Exchange health coverage, even if they would otherwise be eligible for the credit because the employer credit lacks minimum value. Concerned that employers would use automatic enrollment, or other methods, to force otherwise tax-credit-eligible employees into coverage lacking minimum value, the IRS adopted final regulations that require employers to provide employees with an effective opportunity to decline to enroll if the coverage offered does not provide minimum value or requires an employee contribution for any calendar month of more than 9.5 percent of a monthly amount determined as the federal poverty line for a single individual for the applicable calendar year, divided by 12 . . . . Whether an employee has an effective opportunity to enroll or to decline to enroll is determined based on all the relevant facts and circumstances, including adequacy of notice of the availability of the offer of coverage, the period of time during which acceptance of the offer of coverage may be made, and any other conditions on the offer.18
In addition to the IRS, the Department of Labor has provided guidance on aspects of the Fair Labor Standards Act relating to the potential use of "skinny" plan enrollment to defeat Health Care Reform rights. First, FLSA § 18B requires employers to provide employees with a notice of the availability of Exchange coverage, as well as a description of any employer-sponsored health coverage. The DOL model notice for § 18B requires an employer to state whether employer-provided coverage provides minimum value. Second, FLSA § 18C(a)(1) prohibits employers from discharging or discriminating against any employee "with respect to his or her compensation, terms, conditions, or other privileges of employment because the employee . . . has received a credit under section 36B of title 26." DOL interim final rules at 29 C.F.R. § 1984.100 et seq. provide administrative proceedings for an individual to prosecute a claim of employment discrimination based on access to the premium tax credit.
In addition, as described above, the IRS has established "safe harbors" in its regulations under §4980H(b). These safe harbors offer employers a means of avoiding §4980H(b) "free rider" assessment with respect to employees, regardless of whether the employee receives a premium tax credit for Exchange-purchased individual health coverage. The primary purpose of the "free rider" safe harbor is to allow employers to report and manage their liability for assessable payments on the basis of information available to an employer, such as an employee's compensation, or the Federal poverty level. Since other factors, including household size and other household income, determine an employee's premium tax credit entitlement, employer safe harbors for affordability may allow employers to avoid "free rider" assessment with respect to employees who do receive a premium tax credit, for example, because of a larger household size. Therefore, a collateral effect of the IRS's affordability safe harbor regulation may be to reduce the incentive for employers to provide "skinny" health plans as a failsafe because of uncertainty about the applicability of the "free rider" assessment to individual employees.
What Haven't The Regulators Done Since 2013?
The regulatory responses that touch on "skinny" plans are relatively narrowly targeted. Regulations under FLSA § 18C are intended to prevent or reduce the coercive use of "skinny" plans by employers, not to prohibit the offering of employer-sponsored coverage with less-than-minimum value. The IRS affordability safe harbors are quite narrow in their effect, as "skinny" health plans are intended to be used for a wide range of lower income employees, not only those whose premium tax credit eligibility is modified by factors unknown to an employer, such as family size.
However, the regulatory agencies have avoided adopting regulations under § 5000A, the individual mandate, to impose substantive minimum requirements on employer-provided health coverage in order for such coverage to constitute minimum essential coverage within the meaning of Health Care Reform. The statute, as discussed above, provides that minimum essential coverage does not include single-condition or fixed indemnity policies or plans. However, these restrictions have not received expansion or development to address or prohibit potential "skinny" plan designs, such as exclusion of major categories of service from coverage, or unrealistically low, but not fixed, reimbursements for certain care.
Thus, the agencies have not acted directly on the definition of minimum essential coverage, the statutory linchpin for "skinny" plans. In addition, the agencies have not issued regulations under other provisions of Health Care Reform that have the potential to minimize the scope of "skinny" plans, including the limitations on cost sharing under PHSA § 2707(b) and the antidiscrimination requirement of PHSA § 2719.
The impact of "skinny" health plans on the employees of adopting large employers is not clear. For some, the opportunity to satisfy the Individual Shared Responsibility requirement with minimal coverage, at a minimal price, may be welcome. For other employees intending to enroll in Exchange coverage or employer-sponsored coverage that provides minimum value, "skinny" health plans represent a distraction, at best. At worst, employer promotion of "skinny" health plans may discourage lower-income employees from taking advantage of the premium tax credit, especially in cases where employer promotion does not include employment discrimination remediable by Fair Labor Standards Act § 18C.
The interaction of "skinny" plans and the premium tax credit for Exchange coverage represents only one of the challenges practitioners and policymakers face in understanding the interface between employer-sponsored health coverage and other sources of health coverage. With respect to coverage for employees eligible for the premium tax credit, the tiering of the effective price for Exchange coverage, from as low as two percent of income to 9.5 percent of income, does not match the flat cost sharing of 9.5 percent of income used to measure the affordability of employer-sponsored coverage. As a result, some employees of large employers could be worse off with statutorily affordable employer coverage than they would be with no employer coverage at all (the specific group is those with household incomes below three times the Federal poverty line, the point at which the premium tax credit and the employer affordability measures converge at 9.5 percent of income). This problem could be particularly acute in states that do not adopt Medicaid expansion in their implementation of Health Care Reform. In states with expanded Medicaid, the impact of the higher cost to employees for employer-sponsored plans will be mitigated in the case of employees with incomes up to 133 percent (or 138 percent) of the Federal poverty line. No such mitigation will be available to the lowest-income employees in states without Medicaid expansion.
A second area of substantial concern with respect to the interaction of employer-sponsored plans and other sources of health coverage is benefits for dependents. In order to make an offer of coverage consistent with the employer mandate, large employers must make a §4980H(a) offer of coverage not only to employees, but also to employees' dependents. (Dependents, for this purpose include children but not spouses.)
In determining whether a premium tax credit is available for an individual who is eligible for employer-sponsored coverage as an employee's dependent, the measure of the dependent's cost for the employer-sponsored coverage is the cost that the employee must contribute toward self-only coverage. As a result, employers offering dependent coverage, but requiring a substantial contribution toward the cost of such coverage, may impede the ability to obtain Exchange coverage for the dependent. In the case of a child required to be offered employer-sponsored coverage, employer offerings with high employee contributions may simply be a result of the statute. However, the impact of exclusion from the premium tax credit may not be great in the case of children, as Medicaid or CHIP benefits are provided in many states to children with family income up to three or even four times the Federal poverty line.19
1Leading examples: "A Primer on 'Low-Cost' Group Health Plans," by Alden Bianchi of Mintz Levin; "Low-Cost, Skinny Health Plans: Are They Permissible Under the Patient Protection and Affordable Care Act?" by Christopher E. Condeluci of Venable LLP.
2Insurance coverage in the individual or small group market must provide the Essential Health Benefits Package under Public Health Service Act § 2707(a); this requirement does not apply to uninsured group health plans or large group health plans.
3Section 5000A(f) defines minimum essential coverage for purposes of the individual mandate as "coverage under an eligible employer-sponsored plan," without incorporating the affordability and minimum value requirements of § 36B(c)(2)(C).
4"Premium Affordability, Competition, and Choice in the Health Insurance Marketplace, 2014," by Amy Burke, Arpit Misra, and Steven Sheingold, HHS Assistant Secretary for Planning and Evaluation Research Brief, June 18, 2014.
5"Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period," HHS Assistant Secretary for Planning and Evaluation Research Brief, May 1, 2014.
6Major insurers have reported nonpayment and attrition, "ObamaCare Enrollment Is Shrinking, Top Insurers Say," Investor's Business Daily, August 11, 2014. The information compiled at acasignups.net/spreadsheet suggests that the fully-paid headcount is at least 7.2 million and may be closer to 7.9 million.
7HHS Research Briefs of June 18, 2014 (Federally facilitated) and May 1, 2014 (all exchanges).
8HHS Research Brief, June 18, 2014, pages 3-4. The percentage of Exchange coverage with after-credit premiums of $50 or below in the federally facilitated Exchange may be higher than the national average due to the overconcentration of non-expansion states in the Federally facilitated exchange. In expansion states, much of the lowest premium (or highest tax credit) Exchange coverage would impossible due to (no-cost) Medicaid enrollment.
9The lowest premium payable after the premium tax credit will depend, for each state, on whether it has adopted the Affordable Care Act Medicaid expansion. In expansion states, those with the lowest incomes receive Medicaid coverage, and therefore do not receive premium tax credits.
10The IRS has provided some relief by reducing the threshold for avoiding §4980H(a) assessment from 100 percent of full-time employees to 95 percent of full-time employees, and 70 percent for plan years beginning in 2015, 79 FR 8544. In addition, the statute provides a reduction of 30 employees for the purposes of calculating the assessable payment, §4980H(c)(2)(D).
14Proposed Regulation, 78 FR 7314.
15Treas. Regs §1.36B-2(c)(3)(vi); see also proposed §1.36B-6, 78 FR 25909, 25915.
16Prop. Treas. Regs §1.36B-6(c)(1).
17HHS Research Brief, June 18, 2014, Table 2.
18Treas. Regs. §54.4980H-4(b)(1). This language, and the rationale of preventing involuntary enrollment in sub-minimum-value employer coverage, was present in the proposed regulations of January 2, 2013 (78 F.R. 218).
19Described in the State Medicaid and CHIP Income Eligibility Standards Table prepared by CMS.