The Affordable Care Act's (ACA's) Employer Shared Responsibility Provisions (ESRP)

Contents

• Introduction
• Employers Subject to the Employer Shared Responsibility Provisions
• Applicable Large Employer Determination
• Full-Time Employees (Monthly Measurement Method)
• Part-Time Employees
• Seasonal Workers
• Other Types of Workers
• Employer Shared Responsibility Provisions
• Health Insurance Coverage Requirements for Employer Plans
• Optional Full-Time Employee Redetermination
• Combining Methodologies
• Look-Back Measurement Method
• Seasonal Employee Recalculation
• Applicable Large Employer Reporting
• Penalty Determination and Notification
• Penalty Determination
• Penalty for Applicable Large Employers Offering Health Insurance Coverage to at Least 95% of Full-Time Employees
• Penalty for Applicable Large Employers Offering Health Insurance Coverage to Less Than 95% of Full-Time Employees
• Applicable Large Employer Notification
• Employer Notice from an Exchange
• Employer Notice from the IRS
• Employer Shared Responsibility Provision Implementation

Summary

The employer shared responsibility provisions (ESRP), which often are referred to as the employer mandate, generally incentivize large employers to offer adequate and affordable health insurance coverage to their full-time employees and full-time employees' dependents. If an applicable large employer fails to offer health insurance or offers substandard coverage to its employees, the employer may be subject to a penalty (i.e., assessment payment).

All common-law employers, including government entities (such as federal, state, local, or Indian tribal government entities), are responsible for annually determining whether they are considered an applicable large employer (ALE), which is generally an employer that has at least 50 full-time employees (including full-time equivalent employees, which are a representation of non-full-time employees as full-time employees).

If an employer qualifies as an ALE in a given year, then it will be subject to the ESRP in the subsequent year, meaning it will have to offer adequate, affordable health insurance coverage to generally all of its full-time employees (and their dependents) or it will risk being subject to one of two penalties. Regardless of penalty type, a penalty will be triggered only if at least one full-time employee receives financial assistance through an exchange. These types of financial assistance generally are not available to employees who were offered affordable and adequate coverage by their employer. If an employer does not qualify as an ALE, then it will not be subject to the ESRP and will not face a penalty for failing to offer health insurance coverage to its full-time employees.

Which potential ESRP penalty an ALE may be subject to is contingent upon whether an ALE offered appropriate health insurance to enough of its full-time employees (and their dependents). If an ALE offered appropriate health insurance to 95% or more of its full-time employees (and their dependents) and at least one employee received a premium tax credit or cost-sharing subsidy through a health insurance exchange, then the employer may be subject a penalty that is the lesser of (1) an amount based on the number of people who received financial assistance through an exchange or (2) an amount based on the number of the firm's full-time employees. If an ALE did not offer appropriate health insurance coverage to its full-time employees (or offered appropriate coverage to less than 95% of its full-time employees and their dependents) and at least one employee received a premium tax credit or cost-sharing subsidy through a health insurance exchange, then the employer may be subject to a penalty based on the number of the firm's full-time employees.

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Introduction

The employer shared responsibility provisions (ESRP) of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) generally incentivize large employers to offer adequate and affordable health insurance coverage to their full-time employees and their full-time employees' dependents. If an applicable large employer fails to offer health insurance or offers substandard coverage to its employees, that employer may be subject to a penalty.

As shown in Figure 1, all common-law employers, including government entities (such as federal, state, local, or Indian tribal government entities), are responsible for annually determining whether they are considered an applicable large employer (ALE). An ALE is generally an employer that has at least 50 full-time employees (including full-time equivalent employees, which are a representation of non-full-time employees as full-time employees).

Figure 1. Determining When an Employer Is Subject to a Shared Responsibility Provisions Penalty

Source: Congressional Research Service (CRS) analysis of 26 U.S.C. §4980H and 26 C.F.R. §§54.4980H-1 through 54.4980H-6. Notes: Adequate: A health insurance plan in which the health plan pays for at least 60%, on average, of covered health care expenses. Affordable: A health insurance plan in which an individual's required contribution toward the plan premium for self-only coverage does not exceed 9.56% of the employee's W-2 wages in 2018, and 9.86% of the employee's W-2 wages in 2019. This percentage is adjusted annually. Full-time equivalent employees are a representation of non-full-time employees as full-time employees.

If an employer qualifies as an ALE in a given year, then it will be subject to the ESRP in the subsequent year. An employer subject to the ESRP is incentivized to offer adequate, affordable health insurance coverage to their full-time employees (and their full-time employees' dependents). If an employer does not offer such coverage, the employer risks being subject to a penalty if at least one full-time employee receives a premium tax credit or cost-sharing subsidy through a health insurance exchange (exchange).¹

If an employer does not qualify as an ALE, then it will not be subject to the ESRP, nor will it be at risk of a penalty for failing to offer health insurance coverage to its full-time employees.

This report begins with an overview of how employers determine whether they are considered an ALE before outlining the ESRP. It then discusses the two types of ESRP penalties and introduces administrative aspects of the ESRP. This report also includes two appendixes that contain definitions of terms as used in the report and a summary of how various worker classifications are considered for ALE determinations and under the ESRP (Appendix A and Appendix B).

Employers Subject to the Employer Shared Responsibility Provisions

All common-law employers, including government entities (such as federal, state, local, or Indian tribal government entities) and nonprofit organizations that are exempt from federal income taxes, can be subject to the ESRP.

For an employer to be subject to the ESRP, the employer must be considered an ALE, which is an employer that has an average of at least 50 full-time employees (including full-time equivalent employees) on business days during the preceding calendar year.² If an employer does not qualify as an ALE, then it will not be subject to the ESRP, nor will it be at risk of a penalty for failing to offer appropriate health insurance coverage to its full-time employees.

Applicable Large Employer Determination

To determine whether an employer is considered an ALE, an employer calculates its workforce size by averaging the combination of all full-time employees and full-time equivalent employees for each month of the previous calendar year.³ Generally, if this average is at least 50, the employer is considered an ALE and is subject to the ESRP.

ALE determinations are made on an annual basis. Once qualified, an employer is subject to the ESRP for the subsequent calendar year. For example, if an employer employed at least 50 full-time employees in 2018, it would be considered an ALE subject to the ESRP in 2019.⁴

In instances where multiple businesses have a certain level of shared ownership, these businesses must be aggregated into a controlled group before determining whether the group collectively is considered an ALE.⁵ This aggregation occurs even if the businesses are separate legal entities. If the controlled group is collectively determined to be an ALE (i.e., an aggregated ALE group), each subcomponent of that controlled group is considered an ALE, regardless of the total number of employees at that entity, and is subject to the ESRP.

Although both full-time employees and full-time equivalent employees are used to determine whether an employer is considered an ALE, ALEs are responsible for providing health care coverage only to full-time employees. In addition, when applicable, ALEs do not include full-time equivalent employees when calculating an ESRP penalty. These topics are discussed further in the sections on "Employer Shared Responsibility Provisions" and "Penalty Determination," below.

Full-Time Employees (Monthly Measurement Method)

An employee is generally considered full-time for each month that the individual works an average of at least 30 hours per week or 130 total hours in that month.⁶ If an employee is found to be a full-time employee for a specific month, that employee is counted as a full-time employee for each business day in that month. This method is referred to as the monthly measurement method.⁷

Part-Time Employees

Hours worked by part-time employees (i.e., not full-time employees) are converted into full-time equivalent employees and included in the determination of whether an employer is an ALE. To do so, all hours worked by part-time employees during a month are added up and divided by 120 to get the number of full-time equivalent workers in that month.⁸

Seasonal Workers

Seasonal workers are individuals who perform any labor "on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year."⁹

All hours worked by seasonal workers are summed and converted to full-time employees (including full-time equivalent employees) and included in the determination of whether an employer is an ALE unless two conditions are met. If (1) an employer would be considered a large employer for fewer than 120 days in a calendar year and (2) seasonal workers are what push the employer's full-time employee calculation to exceed 50 full-time employees for those days, the employer may effectively exclude the hours worked by seasonal workers and therefore would not be considered an ALE.¹⁰

The definition of seasonal workers is different from the definition of seasonal employees, which is used to determine which employees are considered full-time employees under ESRP. The differences in definitions are summarized in Table 5.

Other Types of Workers

As shown in Table 1, there are various types of workers other than full-time employees, part-time employees, and seasonal workers whose hours are counted using special rules for ALE determination (and, where applicable, under the ESRP). These rules tend to address discrepancies due to some individuals not being compensated on an hourly basis or having other characteristics that differentiate them from full-time employees, part-time employees, and seasonal workers. Definitions of these other types of workers and explanations of their associated rules are summarized in Appendix B.

Employer Shared Responsibility Provisions

Once an employer is determined to be an ALE, the employer must either satisfy the ESRP by offering affordable and adequate health insurance coverage to its full-time employees (and their dependents) or risk being subject to a penalty payment if at least one full-time employee receives a premium tax credit through an exchange.¹¹

For purposes of the ESRP, ALEs must identify which of their employees are considered full-time employees and need to be offered health insurance in order to not risk being subject to a penalty. To do this, employers may use the same full-time-employee conclusions from the ALE determination, may redetermine which employees are considered full-time using a different measurement method (see the "Look-Back Measurement Method," below), or, in certain instances, may use a combination of both methods.

When an ALE is part of an aggregated ALE group, each subcomponent (ALE member) is responsible for identifying which employees are considered full-time under the ESRP, deciding whether to offer health insurance coverage to its full-time employees, and if applicable, paying any specific ESRP penalty amount.¹²

If full-time employees were not offered appropriate health insurance by their employer (as defined in "Health Insurance Coverage Requirements for Employer Plans") and did not receive a premium tax credit through an exchange, the employer would not be subject to a penalty.¹³

ALEs are not at risk of a penalty for failing to offer health insurance coverage to non-full-time employees, such as part-time employees.

Health Insurance Coverage Requirements for Employer Plans

If an ALE decides to offer health insurance to its full-time employees (and their dependents), to satisfy the ESRP and not risk a penalty, this health insurance must be considered adequate and affordable.¹⁴

A plan is considered adequate when the health plan has an actuarial value of at least 60%.¹⁵ Actuarial value is a summary measure of a plan's generosity, expressed as the percentage of total medical expenses that are estimated to be paid by the issuer for a standard population's set of allowed charges. In other words, it reflects the relative share of cost sharing that may be imposed. The actuarial value calculation for determining minimum value includes the employer contributions to health savings accounts and health reimbursement accounts that are part of a high-deductible health plan.

A plan is considered affordable when an individual's required contribution toward the plan premium for self-only coverage does not exceed 9.56% of the employee's W-2 wages in 2018, and 9.86% of the employee's W-2 wages in 2019.¹⁶ (This percentage is annually adjusted.) The definition of affordable—for both an individual employee and a family—is based solely on the cost of individual-only coverage and does not take into consideration the often significantly higher cost of a family plan.¹⁷

Optional Full-Time Employee Redetermination

For purposes of identifying which employees are considered full-time under the ESRP and therefore would need to be offered health insurance coverage to prevent the risk of a penalty, an ALE may redetermine its total number of full-time employees using a different methodology (see the "Look-Back Measurement Method," below) instead of the monthly measurement method, which is the methodology used to determine whether an employer is considered an ALE.¹⁸ As a result, employers may have different full-time employee counts for purposes of determining (1) whether an employer is considered an ALE and (2) which employees need to be offered health insurance coverage to prevent an ESRP penalty (Table 2).

Combining Methodologies

Employers may use a combination of the two methodologies in their redetermination. Specifically, employers may divide their employees into categories (as identified in Table 3) and may use either full-time employee measurement method (monthly or look-back) for each of these categories.¹⁹ However, employers may not use the look-back measurement method for variable-hour and seasonal employees if they use the monthly measurement method for employees with predictable schedules.²⁰ Since employers initially use reasonable expectations to decide whether a new employee is considered a variable hour, seasonal, or full-time employee, the aforementioned structure would provide employers with the ability to move employees between measurement methods based entirely on the employer's expectations, which the Treasury Department and the Internal Revenue Service (IRS) deem as "an excessive level of subjectivity."²¹

Look-Back Measurement Method

Under the look-back measurement method, ALEs determine whether or not an employee is considered a full-time employee under the ESRP over the course of three stages:²²

• 1. Measurement Period. The measurement period is the amount of time employers may measure, on average, whether employees are full-time employees.
• 2. Administrative Period. The administrative period is the amount of time an employer may take to identify and enroll full-time employees into health insurance coverage.
• 3. Stability Period. The stability period is the amount of time an employer may be subject to a penalty for not offering health insurance coverage to employees found to be full time during the measurement period.

Employers may determine the duration of these periods, which can vary between three groupings of workers (ongoing employees, new full-time employees, and new variable-hour and seasonal employees), within the limits outlined in Table 4.²³ Within each of these groupings, employers also may apply different period lengths to each of the subcategories of workers identified in Table 3. Period length does not need to be consistent across all of these subcategories of workers but must be consistent within each subcategory.

Seasonal Employee Recalculation

As compared to ALE determinations, employers treat seasonal employees' work hours differently when identifying whether an employee is considered full time under the ESRP. This difference stems from distinctions in terminology in ESRP regulations, which use different definitions for seasonal workers and seasonal employees.

Seasonal workers are used to calculate whether an employer is an ALE. Although these workers are defined in regulations as labor performing at certain seasons or periods of the year, they effectively affect the ALE determination only when they are employed for more than 120 days (approximately four months).²⁴

Seasonal employees are defined in regulations as employees hired into a position of six months or less. This term is used to determine whether an individual is considered a full-time employee under the ESRP (i.e., must be offered health insurance coverage to avoid a penalty and would be included in any applicable penalty calculation).²⁵ In practice, regulations allow employers to use the "Look-Back Measurement Method" to calculate the full-time status of seasonal employees based on a 12-month measurement period. Because these individuals, by definition, usually work fewer than six months per year in a position, firms using the look-back measurement method may effectively exclude seasonal workers from being considered full-time workers under the ESRP (even if they were considered full-time employees for the ALE determination).

Applicable Large Employer Reporting

ALEs with full-time employees are required to report various types of information to the IRS and to their employees after the conclusion of every calendar year.²⁶

ALEs are responsible for annually reporting two forms to the IRS: Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. These forms contain summary information about the health care coverage that the employer offered, if at all, to each employee considered full time for at least one month in the previous year.²⁷

Specifically, each ALE is responsible for submitting at least one Form 1094-C to the IRS. This form is used to report the employer's general information, whether the ALE is an aggregated ALE (and if so, any applicable ALE subcomponents), the total number of full-time employees in each month of the previous year, whether the employer offered minimum essential coverage to its full-time employees, and the total number of all employees (i.e., full-time and non-full-time employees) in each month of the previous year.²⁸

In addition, each ALE must submit to the IRS one Form 1095-C for each employee who was considered full time for any month of the previous calendar year.²⁹ Form 1095-C is used to report employee personal information; employer general information; if and to whom (e.g., employee only or employee and dependents) the employer offered coverage in each month of the previous year; the employee's share of the monthly cost for the lowest-cost, self-only minimum essential coverage offered to the employee; and, if applicable, the months the employee and potential dependents were covered by an employer's self-insurance coverage.³⁰

Generally, employers must submit these forms to the IRS by February 28 of the subsequent year if paper filed or by March 31 of the subsequent year if electronically filed.³¹ Employers that have to file more than 250 Form 1094-C or Form 1095-C documents often must file electronically, as consistent with other tax information reporting.³² If an ALE fails to file a correct calendar year 2018 form in 2019, it may be subject to a $270 per-return penalty, with a maximum penalty amount of $3.2755 million.³³

ALEs also must provide their full-time employees with a written statement that contains the name and contact information of the ALE and the same information provided to the IRS.³⁴ ALEs may elect to meet this requirement by providing each employee with a copy of his or her specific Form 1095-C that the ALE submitted to the IRS.

Each full-time employee must receive this information by January 31 of the subsequent year.³⁵ If an ALE fails to provide a correct calendar year 2018 statement to a full-time employee in 2019, the ALE may be subject to a $270 per-statement penalty, with a maximum penalty amount of $3.2755 million.³⁶

If an employer intentionally disregards the reporting requirements, the per-return penalty and maximum penalty amounts may be increased. Conversely, penalty amounts may be waived if an ALE fails to report due to reasonable cause.³⁷

Penalty Determination and Notification

ALEs are potentially subject to an ESRP assessment payment if at least one full-time employee receives a premium tax credit through an exchange.³⁸ An individual may be eligible for a premium tax credit if the individual's employer does not offer health insurance coverage or offers insurance that is either inadequate or unaffordable.³⁹ Therefore, if an ALE offered adequate and affordable coverage to every full-time employee (and his or her dependents), the ALE would not be subject to an ESRP penalty.⁴⁰

ESRP penalties apply to all applicable common-law employers, including government entities (such as federal, state, local, or Indian tribal government entities) and nonprofit organizations, even if the employers are exempt from federal income taxes.

Penalty Determination

• An ALE is assessed a penalty for each month that the ALE was in violation of the ESRP. If an ALE is subject to an ESRP penalty, the penalty amount is determined based on one of two formulas; the applicable formula depends on the number of full-time employees that received a health insurance coverage offer, if at all.
• Both penalties are indexed by a premium adjustment percentage each calendar year.⁴¹

Penalty for Applicable Large Employers Offering Health Insurance Coverage to at Least 95% of Full-Time Employees

If, for 2018, an ALE was subject to an ESRP penalty and offered health insurance to more than 95% of its full-time employees (and their dependents), the monthly penalty amount is the lesser of the following:⁴²

• the number of full-time employees who received a premium credit multiplied by one-twelfth of $3,480 for any applicable month, or
• the total number of the firm's full-time employees minus 30, multiplied by one-twelfth of $2,320 for any applicable month.⁴³

Penalty for Applicable Large Employers Offering Health Insurance Coverage to Less Than 95% of Full-Time Employees

If, for 2018, an ALE was subject to an ESRP penalty and offered health insurance coverage to less than 95% of its full-time employees (and their dependents), the monthly penalty assessed to an ALE is equal to the number of its full-time employees minus 30 multiplied by one-twelfth of $2,320 for any applicable month.⁴⁴

Applicable Large Employer Notification

ALEs that are at risk of a potential ESRP penalty will receive two notifications: (1) by an exchange, when an employee is deemed eligible for advanced payments of the premium tax credit and enrolled in a qualified health plan through an exchange, and, (2) by the IRS, after the conclusion of the tax year.

Employer Notice from an Exchange

Exchanges must notify an employer within a "reasonable timeframe" that an employee was deemed eligible for advance payments of the premium tax credit and enrolled in a qualified health plan through the exchange.⁴⁵ All exchanges, state-based and federally facilitated, are required to provide this notification.

Employers may appeal the exchange notification, though this notification does not determine or indicate a potential ESRP liability.⁴⁶

Employer Notice from the IRS

Given the construction of the ESRP penalty, an employer will not be contacted by the IRS until after the employer's and all employees' tax returns have been filed. As part of its determination of whether an employer has an ESRP liability, the IRS notifies an ALE if one or more employees were allowed or received a premium tax credit through an exchange for one or more months during a year.⁴⁷ Any IRS notification also will contain a proposed responsibility penalty amount and a corresponding explanation table.⁴⁸

Employers generally must respond to the IRS within 30 days of receiving the IRS notification either agreeing with or appealing the computation.⁴⁹ After correspondence between the IRS and the ALE has concluded, the IRS will provide a notice to the employer reflecting the final penalty amount and will provide payment options.⁵⁰

Employer Shared Responsibility Provision Implementation

As enacted, the ESRP were supposed to take effect in 2014.⁵¹ However, the IRS provided transition relief in 2014 and did not enforce the ESRP or any associated penalties for that year. The IRS enforced a limited rollout of the provisions in 2015, generally applying the ESRP to employers with at least 100 full-time employees (including full-time equivalent employees). In 2016, the IRS further expanded enforcement to include nearly every business as required by law, except for certain specific circumstances.⁵² The ESRP were enforced on all ALEs beginning in 2017.

Although 2015 was the first year in which the provisions were enforced, ALEs did not receive a notification from federally facilitated exchanges during that year because the federally facilitated exchanges' employer notification program was not phased in until 2016.⁵³ With respect to the IRS notification, ALEs began receiving a notification about potential penalties for tax year 2015 in November 2017. By January 2, 2018, the IRS had notified only 3,820 of 33,080 ALEs identified as being potentially subject to a penalty for tax year 2015.⁵⁴

In 2017, an audit by the Treasury's Inspector General for Tax Administration found that the delay in IRS notifications resulted from some of the IRS's ESRP compliance processes either not working as intended or being delayed, not initiated, or canceled. The audit also found that as of March 21, 2018, the IRS still was unable to process paper information returns promptly and accurately.⁵⁵

Appendix A. Definitions as Used Under the Employer Shared Responsibility Provisions

Appendix B. Employer Shared Responsibility Provisions Treatment of Different Types of Worker Classifications

Author Contact Information

Acknowledgments

Julie Whittaker, Specialist in Income Security, authored an earlier version of a report on this topic.

Footnotes

1.	Although an employee receiving only one type of financial assistance through an exchange triggers a potential employer shared responsibility provisions (ESRP) penalty, the remainder of this report will reference premium tax credits only, since individuals can receive a cost-sharing subsidy only if they already receive a premium tax credit.
2.	26 U.S.C. §4980H(c)(2)(A).
3.	26 U.S.C. §4980H(c)(2)(E).
4.	For employers not in existence throughout the preceding calendar year, the determination of whether an employer is considered an applicable large employer (ALE) is based on the average number of full-time employees (including full-time equivalent employees) a firm reasonably expects to be employed on business days in the current calendar year. 26 U.S.C. §4980H(c)(2)(C).
5.	The controlled group rule applies under 26 U.S.C. §414(b), (c), (m), or (o) and includes employees of partnerships, proprietorships, and so on, which are under common control by one owner or a group of owners. Internal Revenue Service (IRS), Treasury, "Shared Responsibility for Employers Regarding Health Coverage," 79 Federal Register 8560, February 12, 2014.
6.	26 U.S.C. §4980H(c)(4) and IRS, "Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act," May 24, 2018, at https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act. Hereinafter IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
7.	26 C.F.R. §54.4980H–3(c).
8.	26 U.S.C. §4980H(c)(2)(E) specifies that for purposes of determining full-time equivalent employees, the aggregate number of hours of service of employees who are not full-time employees for the month is divided by 120 to get a total number of full-time equivalent employees. However, a caulculation for purposes of determining who is a full-time worker for the assessment of the actual penalty would treat 130 hours of service in a calendar month as the monthly equivalent of 30 hours of service per week (52 weeks x 30 hours, and then dividing by 12 months to get the total hours per month). Thus, a worker who worked 130 hours a month would be considered full-time for purposes of the penalty payment. 26 C.F.R. §54.4980H–1(a)(21).
9.	29 C.F.R. §500.20(s)(1), as referenced by 26 U.S.C. §4980H(c)(2)(B)(ii).
10.	26 U.S.C. §4980H(c)(2)(B).
11.	For purposes of these provisions, the term dependent means a child under the age of 26 of an employee and does not include the spouse of the employee. For more information about minimum essential coverage, please see CRS Report R41331, Individual Mandate Under the ACA.
12.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
13.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
14.	IRS and Department of the Treasury, "Shared Responsibility for Employers Regarding Health Coverage," 79 Federal Register 8545-8656, February 12, 2014.
15.	26 U.S.C. §36B(c)(2)(C)(ii), as referenced by 26 C.F.R. §54.4980H-1(a)(28).
16.	Although the determination of whether an employer met the affordability provision would be made after the end of the calendar year, an employer also could determine affordability prospectively, at the beginning of the year, by structuring its plan and operations to set the employee contribution at a level so that the employee contribution for each employee would not exceed 9.56% of the employee's W-2 wages for 2018 (9.86% of the employee's W-2 wages for 2019). See IRS, "Further Guidance on the Application of the Group Health Plan Market Reform Provisions of the Affordable Care Act to Employer-Provided Health Coverage and on Certain Other Affordable Care Act Provisions," Notice 2015-87, December 16, 2015, at https://www.irs.gov/pub/irs-drop/n-15-87.pdf and IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act." IRS, Internal Revenue Bulletin: 2018-23, Revenue Procedure 2018-34, June 4, 2018, at https://www.irs.gov/pub/irs-irbs/irb18-23.pdf.
17.	This discrepancy is often referred to as the family glitch.
18.	IRS, Internal Revenue Bulletin: 2014-9, Notice 2014-9, February 24, 2014, at http://www.irs.gov/irb/2014-9_IRB/ar05.html. Hereinafter IRS, 2014-9.
19.	26 C.F.R. §54.4980H-3(d)(1)(v), 26 C.F.R. §54.4980H-3(d)(3)(v), and IRS, 2014-9.
20.	IRS, 2014-9.
21.	Reasonable expectations are considered reasonable if they are based upon the facts and circumstances at an employee's start date. 26 C.F.R. §54.4980H-3(d)(2)(ii). IRS, 2014-9.
22.	26 C.F.R. §54.4980H-3(d).
23.	IRS, 2014-9.
24.	26 U.S.C. §4980H(c)(2)(B) and 29 C.F.R. §500.20(s)(1), as referenced by 26 U.S.C. §4980H(c)(2)(B)(ii).
25.	26 C.F.R. §54.4980H-1(38).
26.	If an employer is determined to be part of an aggregated ALE group, each ALE member of the aggregated group is responsible for completing the reporting requirements. IRS, Treasury, "Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer Sponsored Plans," 79 Federal Register 13234, March 10, 2014.
27.	Employers who sponsor employee health insurance coverage also have reporting responsibilities, even if they are not considered an ALE (Form 1094-B and Form 1095-B). IRS, Treasury, "Information Reporting of Minimum Essential Coverage," 79 Federal Register 13229, March 10, 2014.
28.	Full-time employees are those considered full-time under the employer shared responsibility provisions. IRS, 2018 Instructions for Forms 1094-C and 1095-C, September 27, 2018, at https://www.irs.gov/pub/irs-pdf/i109495c.pdf. Hereinafter IRS, Instructions for Forms 1094-C and 1095-C.
29.	Full-time employees are those considered full-time under the employer shared responsibility provisions. Instructions for Forms 1094-C and 1095-C.
30.	IRS, Instructions for Forms 1094-C and 1095-C.
31.	IRS, Instructions for Forms 1094-C and 1095-C.
32.	IRS and Department of the Treasury, "Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer Sponsored Plans," 79 Federal Register 13239, March 10, 2014.
33.	IRS, Instructions for Forms 1094-C and 1095-C.
34.	IRS, "Information Reporting by Applicable Large Employers," January 31, 2018, at https://www.irs.gov/affordable-care-act/employers/information-reporting-by-applicable-large-employers.
35.	For calendar year 2017 reporting, the IRS extended this date to March 2, 2018. IRS, "Information Reporting by Applicable Large Employers," January 31, 2018, at https://www.irs.gov/affordable-care-act/employers/information-reporting-by-applicable-large-employers.
36.	IRS, Instructions for Forms 1094-C and 1095-C.
37.	Reasonable cause can be established if the filer can demonstrate that either significant mitigating factors or a failure beyond the filer's control prevented adherence to a reporting requirement. 26 C.F.R. §301.6724-1, as referenced by 26 C.F.R. §6055-1(h)(1). IRS, Instructions for Forms 1094-C and 1095-C.
38.	As stated previously, if an employer offered unaffordable and inadequate health insurance coverage (or no health insurance at all) and no employee received a premium tax credit through an exchange, that employer would not have triggered a penalty and therefore would not be subject to a penalty.
39.	Premium tax credit eligibility criteria is further discussed in CRS Report R44425, Health Insurance Premium Tax Credits and Cost-Sharing Subsidies.
40.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
41.	The premium adjustment percentage is the national average premium growth rate (IRC §4980H(c)(5) and ACA §1302(c)(4)). IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
42.	26 U.S.C. §4980H(b).
43.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
44.	26 U.S.C. §4980H(a). When ALE status is determined through the aggregation of multiple business or franchises, the 30-employee reduction is proportionally divided among all ALE subcomponents. IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
45.	45 C.F.R. §155.310(h). Regulations do not further define "reasonable timeframe."
46.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
47.	45 C.F.R. §155.310(i). This determination is made using the aforementioned ESRP reporting forms (Forms 1094-C and 1095-C) as well as individual income tax returns, which indicate whether employees were allowed to claim a premium tax credit. IRS, "Understanding your Letter 226-J," June 1, 2018, at https://www.irs.gov/individuals/understanding-your-letter-226-j.
48.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
49.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
50.	IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
51.	P.L. 111-148, §1513(d).
52.	For information about the special circumstances that qualified an ALE for transition relief, see IRS, "Employer Shared Responsibility Provisions Under the Affordable Care Act."
53.	CRS has not identified any publicly available surveys of state exchanges on their notification programs. Although many state-based exchanges have stated that they plan to use the federal exchange notification system, it does appear that at least some state exchanges had implemented notification in 2015. For more information about notification implementation, see CRS Insight IN10904, The Affordable Care Act (ACA): Notifying an Employer of a Potential Shared Responsibility Payment (ESRP).
54.	Testimony of the Honorable J. Russell George, Treasury Inspector General for Tax Administration, in U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on Health Care, Benefits, and Administrative Rules, Continued Oversight of the Internal Revenue Service, 115th Cong., 2nd sess., April 17, 2018, p. 9; and Treasury Inspector General for Tax Administration, Affordable Care Act: Processes to Identify Employers Subject to the Employer Shared Responsibility Payment Need Improvement, March 21, 2018, p. 8, at https://www.treasury.gov/tigta/auditreports/2018reports/201843022fr.pdf.
55.	Treasury Inspector General for Tax Administration, Affordable Care Act: Processes to Identify Employers Subject to the Employer Shared Responsibility Payment Need Improvement, March 21, 2018, p. 8, at https://www.treasury.gov/tigta/auditreports/2018reports/201843022fr.pdf.