Compliance & Regulatory Update

Employee Benefits

IRS Issues Opt-out Payment Proposed Rules

On July 8, 2016, the Internal Revenue Service (IRS) issued proposed regulations on the Affordable Care Act’s (ACA) premium tax credit and individual mandate. The regulations also impact employers through the employer shared responsibility rules. 


The proposed regulations focus primarily on the effect of opt-out payments on the affordability of employer-sponsored coverage: 


  • Opt-out payments made under an unconditional opt-out arrangement will increase an employee’s required contribution; and 
  • Opt-out payments made under a conditional opt-out arrangement are disregarded in determining the required contribution.


These rules will apply to opt-out arrangements beginning on December 31, 2016, unless the arrangement was adopted after December 16, 2015.




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