Human Resources
IRS Asks for Comments on How to Calculate the 40% Excise Tax on High Cost Group Health Plans

IRS Asks for Comments on How to Calculate the 40% Excise Tax on High Cost Group Health Plans


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The U.S. Treasury and the Internal Revenue Service (IRS) issued a request for comments on possible methods of calculating the tax on high cost group health plans, giving employers and group health plans the first public insight into the approaches that the IRS is considering applying in administering the 40% excise tax, which is scheduled to go into effect in 2018. The request came in Notice 2015-16, which was released on February 23, 2015.

In Notice 2015-16, the IRS, after an extensive overview of the purpose, statutory structure, and background of the excise tax, invites comments on a number of potential approaches in calculating the tax. The approaches primarily relate to:

  • The definition of “applicable coverage” under Code Section 4980I;
  • The determination of the cost of applicable coverage; and
  • The application of the annual statutory dollar limit to the cost of applicable coverage.

IRS Asks for Comments on How to Calculate the 40% Excise Tax on High Cost Group Health Plans