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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.






Contact Info

The Wagner Law Group


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104







December 4, 2014


 Health and Welfare Law Alert




IRS Releases Final Regulations on Affordable Care Act's Individual Mandate




The IRS has released final regulations that implement the Affordable Care Act's ("ACA's") minimum essential coverage requirement, which is more commonly referred to as the individual mandate. The final regulations offer guidance on the meaning of minimum essential coverage and the rules applicable to determining whether employer-provided coverage is affordable.


Background. Starting in 2014, the ACA's individual mandate requires that all non-exempt U.S. citizens and legal residents must either: (1) maintain qualifying health coverage (i.e., minimum essential coverage); (2) qualify for a health coverage exemption; or, (3) pay a penalty when filing a federal income tax return. Earlier this year, the IRS released proposed regulations regarding the individual mandate. (See the Alert of 1/30/14 for further details.) The final regulations make several changes to the proposed regulations in response to comments received from the public.


Coverage for the Medically Needy. The final regulations first address whether Medicaid coverage for the "medically needy" qualifies as minimum essential coverage. (The medically needy are individuals with high medical expenses who would be eligible for Medicaid but for their income level.)


The proposed regulations provided that Medicaid coverage for the medically needy did not qualify as minimum essential coverage because it is not required to be comprehensive. The final regulations retain this rule but clarify that HHS has authority to designate a state's Medicaid program as minimum essential coverage, if it offers the essential health benefits required by the ACA.


Employer Contributions to a Cafeteria Plan. The final regulations next address whether employer contributions to a Section 125 cafeteria plan should be used to reduce required employee contribution amounts when determining whether employer-sponsored coverage is affordable. (Employees who must pay more than a certain percentage of income (8 percent for 2014) for employer-provided coverage are exempt from the individual mandate.)


The final regulations provide that the employee's required contribution is reduced by employer contributions to a cafeteria plan if: (1) the employee does not have the option to take the employer contribution as a taxable benefit (e.g., cash); (2) the contribution may be used to pay for minimum essential coverage; and (3) the contribution may only be used to pay for medical care.


For these purposes, employer contributions do not include employee salary reduction contributions.


Health Reimbursement Accounts. The final regulations clarify that employer contributions to an HRA that is integrated with an employer-sponsored plan are taken into account in determining the affordability of coverage only if the employee may use HRA funds to pay required employee contributions. (These funds can also be used for non-covered and cost sharing expenses of the group health plan.) However, in order for HRA contributions to be considered when determining affordability, the HRA and employer-sponsored group health plan must be offered by the same employer.


Employer contributions to an HRA will only count towards an employee's required contributions if they are specified under the terms of the plan or can otherwise be determined within a reasonable time before the employee must decide whether to enroll in the group health plan. In other words, employees must be able to determine whether the employer-sponsored coverage is affordable before they decide whether to enroll in the plan or seek coverage through an Exchange.


Wellness Program Incentives. The final regulations confirm that wellness program incentives are treated as unearned for the determination of whether employer-sponsored coverage is affordable, unless the incentives relate to tobacco use. In other words, the determination of affordability is based on the employee contribution that is charged to non-tobacco users or to tobacco users who complete the related wellness program, such as attending smoking cessation classes. This rule applies regardless of whether the wellness program uses discounts or surcharges and whether the program is participatory or outcome-based.


The final regulations are accessible at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-27998.pdf






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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.