Individual Mandate (Individual Shared

 Responsibility)

Note: Effective January 1, 2019, the individual mandate is effectively repealed.  

The "individual mandate" provision under Health Care Reform (also known as individual 

shared responsibility) requires every individual to have minimum essential health 

coverage for each month, qualify for an exemption, or make a payment when filing his or 

her federal income tax return.

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Establishment of Health Insurance 

Exchanges and SHOPs

Exchanges (also known as Health Insurance Marketplaces) provide an option for 

individuals to buy private health insurance. The Exchanges also operate the Small 

Business Health Options Program (SHOP) as an option for qualified small employers to 

purchase employee health coverage.

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Grandfathered Plans

This page features information on the following topics regarding grandfathered plans:

• Overview 
• Why is Grandfathered Status Significant? 
• Requirements for Grandfathered Plans 
• Maintaining Grandfathered Status 
• Additional Information 
• 
  
•  

Overview

A "grandfathered plan" is a group health plan in existence as of March 23, 2010 (the date 

Health Care Reform was signed into law) that has not made certain significant changes 

that either reduce benefits or increase out-of-pocket costs for individuals covered under 

the plan. (The date a particular employee joins a plan does not necessarily reflect the date 

the plan was created. New employees and new family members can be added to 

grandfathered group plans after March 23, 2010.)

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Form W-2 Reporting of Employer-

Sponsored Health Coverage

Beginning with calendar year 2012 Forms W-2 (required to be furnished to employees in 

January 2013), employers that provide a group health plan to employees and who have not 

been granted transitional relief generally must report the cost of the coverage provided to 

each employee annually.

Note: 

This requirement does not apply to employers that were required to file fewer than 250 

Forms W-2 for the preceding calendar year, unless and until the IRS publishes further 

guidance giving at least 6 months' advance notice.

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Dependent Coverage To Age 26

Under Health Care Reform, beginning with plan years starting on or after September 23, 

2010, when a plan covers dependents, it must continue to make the coverage available 

until a child reaches the age of 26, even if the young adult is married, no longer lives with 

his or her parents, is not a dependent on a parent's tax return, or is no longer a student.  

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cash for Premium Payments & 

Other Employer Payment Plans

Employer payment plans and certain other employer health care arrangements are 

considered group health plans that do not comply with key market reforms of the 

Affordable Care Act (ACA), including the annual dollar limit prohibition and preventive

 services requirements. This section provides a general overview of which types of

 arrangements will violate the ACA's requirements for group health plans and the potential 

penalties involved. 

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Cadillac Tax

Effective for taxable years beginning after December 31, 2021, an excise tax will be 

imposed on high cost employer-sponsored health coverage. The tax is commonly referred 

to as the "cadillac tax" and is governed by Internal Revenue Code (IRC) section 4980I.

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Appealing Marketplace Decisions & IRS

 Letters

Both the Health Insurance Marketplaces and the Internal Revenue Service (IRS) have 

begun sending letters to employers to enforce the Affordable Care Act’s employer shared 

responsibility provisions(also known as "pay or play"). Learn more about these letters 

below.

Health Insurance Marketplace Letters

Health Insurance Marketplaces must notify employers that one or more of their employees 

has been determined to be eligible for advance premium tax credits and cost-sharing 

reductions, and has enrolled in a Marketplace plan. Because these events may trigger 

penalties under pay or play, applicable large employers subject to these provisions—

generally those employers with at least 50 full-time employees, including full-time 

equivalent employees—may seek to appeal an employee's eligibility determination.

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Additional Medicare Tax for High Earners

This page features the following topics on the Additional Medicare Tax for High Earners:

• Overview 
• Basic FAQs 
• Employer FAQs 
• Employee FAQs 
• Additional Information  
• 
  

Overview

For taxable years beginning after December 31, 2012, employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year.

Effective November 29, 2013, final rules provide guidance for employers relating to the implementation of Additional Medicare Tax, including the employer process for adjusting underpayments and overpayments of the tax and for filing a claim for refund for an overpayment.

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ACA Section 1557 

Nondiscrimination in Health Programs & 

Activities

Section 1557 of the Affordable Care Act builds on existing federal civil rights laws to 

prohibit covered entities from discriminating against individuals participating in certain 

health programs or activities on the basis of race, color, national origin, sex, age, or 

disability.

Special Update: 

On December 31, 2016, a nationwide injunction was issued prohibiting 

enforcement of Section 1557's nondiscrimination rules classifying gender identity and 

termination of pregnancy as "sex" discrimination. It is unclear at this time what the 

outcome of the litigation will be. However, all other provisions of Section 1557 and the 

regulations thereunder are currently effective. Covered entities with questions on how to 

proceed regarding the administration of benefits are advised to contact a knowledgeable 

employment law attorney.

This page features information on the following aspects of the law:

• Effective Dates 
• Who is Covered  
• Protections 
• Notice & Tagline Requirements 
• Penalties  
• Additional Resources 
• 
  
• 
  

Effective Dates

While section 1557 has been in effect since its enactment in 2010, a final rule implementing 

section 1557 became effective July 18, 2016. Certain notice requirements addressed in the 

final rule (discussed below) became effective October 16, 2016.

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ACA Penalties by Company Size

This page features the following topics regarding Health Care Reform penalties by company size:

• Overview
• 
  
  • Excise Tax Information 
  
  1. Employers Sponsoring Group Health Plans 

  2. Employers Sponsoring Non-Grandfathered Group Health Plans 

  3. Employers Sponsoring Grandfathered Group Health Plans 

  4. Employers With Tax -Favored Arrangements 

  5. All Employers (No Group Health Plan Required) 

  6. Health Programs That Receive Federal Financial Assistance 

  
  
   
• Penalties for All Employers
• 
  
• Penalties for Employers with 50+ Employees 
• Penalties for Employers with 250+ Employees 
• Affordable Care Act Penalty Provisions Not Yet Effective
• 
  

Overview

The following is a general overview of the penalties that may apply if employers do not 

comply with key provisions under Health Care Reform. The information is subject to 

change based on new government requirements or amendments to the law. Additionally, 

your company or group health plan may be exempt from certain requirements and/or 

subject to more stringent requirements under your state's laws. If you have any questions 

regarding your obligations, please consult knowledgeable employment law counsel.

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