8871 / If an employer offers health coverage to all full-time employees, but not to their dependents, is that employer subject to the ACA shared responsibility provisions?

Yes, if the employer is otherwise required to offer health coverage and fails to offer health coverage to the dependents of its employees, the employer will be subject to the shared responsibility penalty if one of those employees receives the premium tax credit for insurance purchased through the marketplace.

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Planning Point: Note that IRS FAQ issued on the subject provides that an employer does not become liable for a shared responsibility penalty if only the dependent receives the premium tax credit.¹

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The IRS provided transition relief for the 2014 and 2015 plan years for employers who offered coverage to employees but failed to offer dependent coverage so that the shared responsibility penalty was not assessed if the following were true:

(1)  The employer failed to offer dependent coverage.

(2)  The employer offered dependent coverage, but that coverage failed to constitute minimum essential coverage.

(3)  The employer offered dependent coverage to some, but not all, of its employees’ dependents.

Further, the transition relief is only available to employers who did not offer dependent coverage in 2013 or 2014. The employer is required to take steps toward offering dependent coverage in 2014 or 2015 in order to take advantage of the transition relief. ²