The notice seeks comments on how to calculate and administer the tax. The following are some of the proposed approaches.
Timing - Following the end of each calendar year, employers will need to determine whether and by how much the cost of coverage exceeded the allowed limit for each month. The employer must then notify the IRS and each coverage provider of their share of the excess benefit so the tax can be calculated and paid.
Cost - The cost of coverage may be determined in a manner similar to determining COBRA premiums.
Age and Gender Adjustments - The current thresholds for 2018 are $10,200 for individual coverage and $27,500 for family coverage. These amounts may be increased for some employers based on how the age and gender of their employee population compares to the national workforce. No downward adjustments will be made. The notice seeks input on how these adjustments should be determined.
Allocation of Accounts - The notice proposes that employer and employee contributions to accounts such as HSAs, Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) would be allocated equally to each month of the plan year, regardless of when the contributions were actually made. For FSAs, the agencies propose that the annual contribution amount be used, regardless of whether all funds were spent during the year or some funds were carried over to the next year.
Employer Aggregation - Related employers would be aggregated and treated as a single employer.
Taxation - No deduction is allowed for the payment of the tax.
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