IRS Issues Proposed Regulations on the ACA's Excise

Beginning in 2018, the Affordable Care Act ("ACA") imposes a 40 percent excise tax on multiemployer health plan benefits that cost more than $27,500 per year, or $30,950 per year for construction and other high-risk trades.  On February 23, 2015, the IRS issued proposed regulations to clarify and apply the 40 percent excise tax.  IRS Notice 2015-16 sets forth the IRS's working definition of applicable coverage, determination of cost of applicable coverage, and applicable dollar limit.

The IRS has requested public comment on these issues by May 15, 2015. 

The IRS has proposed applicable coverage for purposes of the excise tax to include:  Multiemployer plans, Health Flexible Spending Accounts (FSAs), Archer Medical Savings Accounts (MSAs), Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), government plans, retiree coverage, and on-site medical clinics except when de minimis in treatment.

Coverage will not include:  accident or disability income insurance, liability insurance, supplemental liability insurance, workers' compensation, automobile medical payment insurance, credit insurance, long-term care insurance, vision and dental excepted benefits, and on-site medical clinics that are de minimis in treatment.

For more information about the excise tax on multiemployer health plans, please contact your Trust Fund counsel.

By Kristina Zinnen | May 6, 2015

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