The Treasury Department and Internal Revenue Service recently issued final regulations (available here) implementing the employer shared responsibility provisions of the Affordable Care Act. For “applicable large employers” — i.e., those with an average of 50 or more full-time and full-time equivalent employees on business days during the prior calendar year — these are perhaps the Act’s most important provisions. The final regulations provide employers with the answers to two key questions: What’s this requirement going to cost? And, what changes do I need to make to my group health plan(s) to come into compliance?

The Act’s employer shared responsibility provisions take the form of amendments to the Internal Revenue Code. Specifically, the Act added new Code Section 4980H, which provides that an applicable large employer is subject to an assessable payment if one or more full-time employees is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction and either:

  • The 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; or
  • The employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan but the coverage fails to meet requirements for affordability and minimum value.

The employer shared responsibility rules were originally slated to go into effect beginning January 1, 2014, but enforcement was delayed for one year to January 1, 2015 by IRS Notice 2013-45 (available at: In a series of notices issued in 2011 and 2012, the Treasury Department and IRS offered proposals and invited public comments on issues relating to the definition of terms such as “employer,” “employee,” and “hour of service.” The proposals also included an approach to use an optional look-back measurement method for determining full-time employee status, and an affordability safe harbor. Taking into account the comments received in response to this series of notices, the Treasury Department and the IRS released a proposed regulation on December 28, 2012.

While the final regulations make many welcome and important refinements, they break little new ground. The basic regulatory structures implementing the Act’s employer shared responsibility rules as set out in proposed regulations and earlier guidance (discussed in our January 16, 2013 client advisory) remain intact. The final regulations instead(i) fix glitches in the proposed regulations, (ii) provide some important clarifications of certain provisions of the proposed regulations, and (iii) extend and expand the transition rules that were originally offered in the preamble to the proposed regulations.

Set out below are ten changes made in the final regulations that (in our view) are among the most important:

Click here to view the table.