Pillsbury Winthrop Shaw Pittman

IRS releases final regulations on ‘Pay or Play’

By Mark Jones and Amber Ward

On 10 February 2014, the Internal Revenue Service (IRS) published long-awaited regulations on the employer shared responsibility provisions — or ‘Pay or Play’ — under the Patient Protection and Affordable Care Act. The final regulations provide two particularly important pieces of transitional relief to employers: (1) Pay or Play is delayed for many employers with 50–99 employees until 2016; and (2) large employers subject to Pay or Play in 2015 need only offer coverage to 70 per cent of full-time employees to avoid penalties. The final regulations also include the final rules for complying with Pay or Play. These will allow employers to now move forward with implementing a strategy to comply with Pay or Play.

Under the Affordable Care Act, ‘large employers’ with at least 50 full-time employees (including full-time equivalents) are subject to Pay or Play. Pay or Play requires large employers to either offer affordable coverage of minimum value to 95 per cent of its full-time employees and their dependents or pay a substantial assessment. The assessment can take two forms. If a large employer does not offer coverage during the calendar year to at least 95 per cent of its full-time employees and their dependents, it will owe an amount equal to the number of full-time employees employed for the year (minus 30), multiplied by $2,000 (£1,200), if at least one full-time employee obtains coverage under a state health insurance marketplace and receives a premium tax credit. If an employer offers coverage to at least 95 per cent of its full-time employees, but that coverage does not meet certain affordability or minimum value standards, and the employer has one or more full-time employees who obtain coverage under a state health insurance marketplace, the employer will owe an amount equal to the number of full-time employees who receive a premium tax credit for their coverage from the marketplace, multiplied by $3,000…

Click on the link below to read the rest of the Pillsbury briefing.

Sign in or Register to continue reading this article

Sign in


It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer


Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.


Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.


Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.


Tower 42, Level 23
25 Old Broad Street