Opt-Out Rules Delayed | January 27, 2017

Dan Kuperstein

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The proposed opt-out rules issued by the IRS in July 2016 have been delayed after employer concerns were raised. Many employers found the proposed rules to be overly complicated and difficult to implement. Employee Benefits Attorney Dan Kuperstein explains.

Resources: Dec. 29, 2016 | Final IRS Regulations


Video Transcript: 
Hi, I’m Dan Kuperstein, and welcome to ComplianceMINUTE.

In an earlier episode we discussed proposed rules from the IRS, issued in July of 2016 that made it harder for employers to offer opt-out payments for employees waiving health insurance. These rules were supposed to be effective on January 1, 2017.

Employers that failed to comply with the rules would have been required to add the amount of the opt-out or waiver payment to the cost of self-only coverage, and this could have had a detrimental impact on the affordability of the coverage for purposes of complying with the ACA’s affordability requirement, and failure to comply with the ACA’s affordability requirement could have subjected employers to substantial penalties under Code § 4980H(b), commonly referred to as the Pay or Play’s “(b) Penalty.”

On December 19, 2016, the IRS issued a final regulation that indicated that the IRS would delay the final regulation on the impact of opt-out arrangements on the ACA’s “affordability” requirement.

Specifically, in the final regulation, the IRS indicated that it is still examining the issues raised by opt-out arrangements, and expects to finalize those proposed regulations in a separate regulation “at a later time.”

This was very good news for employers. Many employers found the proposed rules to be overly complicated and difficult to implement.

For more information on this and other ACA topics, visit our Knowledge Center at corpsyn.com. Thank you.

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Dan Kuperstein, Senior Vice President of Compliance, is an attorney with experience in a broad array of sophisticated employee benefits and labor and employment matters, including ERISA, the Affordable Care Act, COBRA, HIPAA and GINA compliance. His experience includes representation of both public and private companies and health and pension plans. Dan is a respected thought leader on Healthcare Reform and has published articles on the Affordable Care Act and other laws and regulations.