The Internal Revenue Service (IRS) has come up with a collection of employer mandate penalty patches.

The patches, described in IRS Notice 2015-17, could help employers that have been using employer payment plans to pay for employees’ health coverage. 

The patches could also help S corporations that are paying for coverage for 2 percent shareholder-employees, and a related interpretation could help employers that are increasing workers’ pay to help them pay for individual health coverage.

The Patient Protection and Affordable Care Act (PPACA) is set to impose two sets of penalties on “applicable large employers” (ALEs) that fail to offer employees what the government classifies as affordable coverage with a minimum value, and it imposes many benefits mandates, such as a requirement that health plans cover basic preventive services without imposing cost-sharing requirements on the enrollees.

The Internal Revenue Servicem(IRS) has been moving toward keeping employers from meeting PPACA coverage standards with employer payment plans, or arrangements to provide health benefits by reimbursing employees for the cost of health insurance coverage.

The Small Business Health Options Program (SHOP) exchange system is supposed to give employers a vehicle to pay for coverage and let workers choose their own plans, but “the market is still transitioning, and the transition by eligible employers to SHOP marketplace coverage or other alternatives will take time to implement,” officials say.

Because of the issue, small employers that use employer payment plans to pay for individual health or Medicare plan premiums for 2014 and the first half of 2015 will not have to pay penalties for offering coverage that fails to comply with PPACA benefits mandates over that period, officials say.

After June 30, 2015, the affected employers would have to pay the penalty tax for using employer payment plans rather than SHOP plans or ordinary group coverage, officials say.

Elsewhere in the notice, IRS officials say employers can increase workers’ pay to help them pay for individual coverage without that arrangement necessarily creating an employer payment plan. But, if employers require the employees to use the extra money to buy health coverage, that might create an employer payment plan, officials say.

Officials say employers that have been reimbursing workers for coverage under IRS Revenue Ruling 61-146 cannot escape from PPACA coverage requirements by paying for workers’ coverage on an after-tax basis.

See also: Texas Applies Group Rules To Individual-Policy Programs

In the long run, any arrangement an employer uses to pay for workers’ coverage, whether before or after taxes, is a group health plan and is subject to PPACA group health plan requirements, officials say.

The new employer payment plan relief will not affect stand-alone health reimbursement arrangements (HRAs) or other types of medical expense reimbursement arrangements, officials say.

In another section of the notice, IRS officials say they will hold off on imposing PPACA rules on health coverage for S corporations’ 2 percent shareholder-employees until they develop guidance on that issue.

CORRECTION: An earlier version of this story described the affected employer payment plan sponsors incorrectly. The sponsors affected are non-ALEs.