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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 19 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five 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


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
7121 Fairway Drive
Suite 203
Palm Beach Gardens, FL 33418


New York Office

Tel: (716) 650-5987

Fax: (716) 633-0301

333 International Drive

Suite B-4

Williamsville, NY 14221


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104


May 31, 2012 

 State and Federal Law Alert







IRS Releases Final Regulations Explaining PPACA's Health Insurance Premium Tax Credit





The IRS recently issued final regulations addressing the health insurance premium tax credit provisions in the Patient Protection and Affordable Care Act ("PPACA"). In particular, the regulations provide employer-sponsored plans with guidance on certain rules relating to the tax credit, including determining: (i) an employee's eligibility to receive the tax credit; and (ii) the "affordability" of the plan's coverage. These rules are significant for employers because, effective 2014, if any full-time employee receives the tax credit, the employer may be assessed a "shared responsibility" penalty.  


Beginning in 2014, certain lower-income taxpayers who enroll in coverage under "Qualified Health Plans" through Insurance Exchanges can receive a health insurance premium tax credit. The final regulations offer guidance on certain issues related to the premium tax credit and employer-sponsored plans, including:


Determining Employees' Tax Credit Eligibility. The regulations explain that an employer-sponsored plan will be considered to provide minimum essential coverage if it: (i) is affordable to the employee, and (ii) provides minimum value (i.e., the plan's share of the total cost of covered health care is at least 60%). 

  • Employees that are eligible for minimum essential coverage through an employer-sponsored plan will generally be ineligible to receive the tax credit.
  • Eligible employees who decline enrollment in an employer-sponsored plan generally remain ineligible for the tax credit during the coverage period relating to the open enrollment.
  • The tax credit is generally unavailable to employees who enroll in an employer-sponsored plan, even if the plan's coverage does not satisfy the minimum essential coverage requirement.
  • If employees are automatically enrolled in an employer-sponsored plan, they will be given a grace period to undo such enrollment so they can maintain their eligibility for the tax credit.
  • Employees may qualify for the tax credit during any waiting period before their coverage becomes effective under an employer-sponsored plan. However, the IRS is expected to provide a safe harbor that will allow employers to avoid liability for the shared responsibility penalty during an employee's first three months of employment. 

Determining Whether a Plan is Affordable. The regulations clarify that under PPACA, the calculation of whether employer-sponsored coverage is affordable is based on the employee's cost of self-only coverage. 

  • Employer-sponsored coverage is unaffordable if the cost for self-only coverage exceeds 9.5% of the employee's household income for the taxable year.
  • Employer contributions to a health savings account (HSA) do not affect the affordability calculation because employees cannot use HSA funds to pay premiums for employer-sponsored coverage.
  • Health Reimbursement Arrangement (HRA) contributions that are to be used exclusively for the reimbursement of medical expenses would not impact the affordability calculation. It is unclear, however, whether HRA contributions that can be used to offset the employee's cost of coverage will impact the affordability calculation.




This Newsletter is protected by copyright. Material appearing herein may be reproduced with appropriate credit.


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 advertising.