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IRS Issues Final Regulations on Individual Mandate & October 1 Deadline to Provide Notices of Exchange Coverage Options

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August 2013

IRS Issues Final Regulations on Individual Mandate
The IRS has published final regulations regarding the individual mandate component of the Affordable Care Act (ACA). The regulations are largely unchanged from the proposed rules published on February 1, 2013, and provide that individuals must maintain “minimum essential coverage,” or pay a penalty, also known as a “shared responsibility payment.” Under the regulations, an individual is considered to have minimum essential coverage during a particular calendar month if the individual is entitled to receive benefits for at least one day during the month. The regulations also provide exemptions from the penalty on various grounds, including religious conscience, economic hardship, and incarceration.

“Minimum essential coverage” includes coverage under employer-sponsored group health plans, government-sponsored plans, grandfathered health plans, individual plans, and any other coverage defined as constituting minimum essential coverage. The IRS will begin enforcing the rule effective January 1, 2014. Even though the individual mandate is still scheduled to be effective beginning on January 1, 2014, the employer “pay or play” mandate has been delayed until 2015, as noted in our prior FR Alert.

Reminder of October 1 Deadline to Provide Notices of Exchange Coverage Options
As a reminder, most employers are required to provide a notice of exchange coverage options to current employees by October 1, 2013. We summarized this requirement in a prior FR Alert. Importantly, the Department of Labor (DOL) has provided model notices that employers can use to satisfy this requirement (one model notice for employers that offer health coverage, and another model notice for employers that do not offer health coverage).

Employers are also required to provide information regarding exchange coverage options in COBRA election forms, beginning October 1, 2013. Again, the DOL has provided a model COBRA election notice that can be used for this purpose. 

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