The Affordable Care Act requires certain employers (applicable large employers) to offer health coverage that is affordable and provides minimum value to their full time employees. If an ALE does not provide appropriate coverage, it must make a tax penalty payment to the IRS if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage through the health insurance Marketplace.
The IRS has a series of Questions and Answers that provide guidance on the employer shared responsibility provisions of the ACA. Those Q&As were recently updated to address the new guidance on Association Health Plans.
Q&A 18 asks, “Do the employer shared responsibility provisions apply if an employer that is not otherwise an ALE offers coverage through an association health plan?”
An Association Health Plan (AHP) is an ERISA-covered group health plan sponsored by a group or association of employers (instead of a single employer) to provide health coverage to the employer members of the AHP.
The new ACA Q&A confirms that offering coverage through an AHP does not make an employer an applicable large employer if it would not be otherwise. Whether an employer member of an AHP is an ALE depends on the number of full-time employees the member employer employed in the prior calendar year and is not related to whether the employer offers coverage through an AHP.
To access the employer shared responsibility Q&As, click here.
