The Wagner Law Group Description
Wagner Law Group, A Professional Corporation, is a nationally
recognized ERISA & employee benefits, estate planning,
employment, labor & human resources practice.
in 1996, The Wagner Law Group has 23 attorneys engaged
exclusively in employee benefits, estate planning and
employment law. Seven 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.
Wagner Law Group
Fax: (561) 293-3591
7108 Fairway Drive
Palm Beach Gardens, FL 33418
Francisco, CA 94104
January 30, 2014
State and Federal Law
"Unaffordability" Provisions of the Individual Shared
The IRS has issued proposed
regulations clarifying certain provisions of the individual shared
responsibility provisions of the Patient Protection and Affordable
Care Act ("PPACA"). Under these provisions, all individuals
must either be insured by "minimum essential coverage" or
pay a penalty on their federal tax returns. Under an unaffordability
exception, individuals who cannot afford coverage because their
required contribution towards minimum essential coverage exceeds 8%
of their annual household income are not subject to the penalty. (See
the Alert of 2/14/13 for further details.)
For purposes of the
unaffordability rule, when determining if the cost of coverage
exceeds 8%, amounts made available under an HRA would reduce the
employee's required contribution if they may be used for employee
contribution payments. Amounts that can only be used to reimburse
cost sharing (such as deductibles or co-pays) are not taken into
account when determining unaffordability because they do not affect
the employee's cost of acquiring minimum essential coverage.
Under the proposal, if an
employee elects to make pre-tax, salary reduction contributions,
these amounts are treated as employee contributions for purposes of
determining unaffordability, even though they are considered to be
employer contributions for income tax calculation purposes.
The IRS is asking for
comments on how to treat employer credits to a cafeteria plan when
they cannot be converted into cash or taxable benefits.
Group health plans are
permitted to provide incentives, such as a reduction in required
employee contributions for the successful completion of a wellness
program. For purposes of the unaffordability rule, when calculating
required employee contributions, it is to be assumed that all
employees satisfy a wellness program's tobacco cessation program and
receive the program's incentive reward. Accordingly, if the tobacco
cessation program provides a contribution discount for non-tobacco
users, the contribution discount is included in the unaffordability
analysis regardless of whether the employee completes the program.
Incentives for all other
types of wellness programs are not included in the unaffordability
analysis, regardless of whether the employee successfully completes
the program or receives a contribution discount.
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Pursuant to Internal Revenue Service Circular 230, we
hereby inform you that any advice set forth herein with respect to US
federal tax issues is not intended or written by The Wagner Law Group
to be used and cannot be used, by you or any taxpayer, for the purpose
of avoiding penalties that may be imposed on you or any other person
under the Internal Revenue Code.
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