§ 4980D. Failure to meet certain group health plan requirements
(a)
General rule
There is hereby imposed a tax on any failure of a group health plan to meet the requirements of chapter 100 (relating to group health plan requirements).
(b)
Amount of tax
(1)
In general
The amount of the tax imposed by subsection (a) on any failure shall be $100 for each day in the noncompliance period with respect to each individual to whom such failure relates.
(2)
Noncompliance period
For purposes of this section, the term “noncompliance period” means, with respect to any failure, the period—
(3)
Minimum tax for noncompliance period where failure discovered after notice of examination
Notwithstanding paragraphs (1) and (2) of subsection (c)—
(A)
In general
In the case of 1 or more failures with respect to an individual—
(i)
which are not corrected before the date a notice of examination of income tax liability is sent to the employer, and
the amount of tax imposed by subsection (a) by reason of such failures with respect to such individual shall not be less than the lesser of $2,500 or the amount of tax which would be imposed by subsection (a) without regard to such paragraphs.
(c)
Limitations on amount of tax
(1)
Tax not to apply where failure not discovered exercising reasonable diligence
No tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Secretary that the person otherwise liable for such tax did not know, and exercising reasonable diligence would not have known, that such failure existed.
(2)
Tax not to apply to failures corrected within certain periods
No tax shall be imposed by subsection (a) on any failure if—
(3)
Overall limitation for unintentional failures
In the case of failures which are due to reasonable cause and not to willful neglect—
(A)
Single employer plans
(i)
In general
In the case of failures with respect to plans other than specified multiple employer health plans, the tax imposed by subsection (a) for failures during the taxable year of the employer shall not exceed the amount equal to the lesser of—
(ii)
Taxable years in the case of certain controlled groups
For purposes of this subparagraph, if not all persons who are treated as a single employer for purposes of this section have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section
1561.
(B)
Specified multiple employer health plans
(i)
In general
In the case of failures with respect to a specified multiple employer health plan, the tax imposed by subsection (a) for failures during the taxable year of the trust forming part of such plan shall not exceed the amount equal to the lesser of—
(I)
10 percent of the amount paid or incurred by such trust during such taxable year to provide medical care (as defined in section
9832
(d)(3)) directly or through insurance, reimbursement, or otherwise, or
For purposes of the preceding sentence, all plans of which the same trust forms a part shall be treated as one plan.
(ii)
Special rule for employers required to pay tax
If an employer is assessed a tax imposed by subsection (a) by reason of a failure with respect to a specified multiple employer health plan, the limit shall be determined under subparagraph (A) (and not under this subparagraph) and as if such plan were not a specified multiple employer health plan.
(d)
Tax not to apply to certain insured small employer plans
(1)
In general
In the case of a group health plan of a small employer which provides health insurance coverage solely through a contract with a health insurance issuer, no tax shall be imposed by this section on the employer on any failure (other than a failure attributable to section
9811) which is solely because of the health insurance coverage offered by such issuer.
(2)
Small employer
(A)
In general
For purposes of paragraph (1), the term “small employer” means, with respect to a calendar year and a plan year, an employer who employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. For purposes of the preceding sentence, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section
414 shall be treated as one employer.
(B)
Employers not in existence in preceding year
In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is a small employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.
(3)
Health insurance coverage; health insurance issuer
For purposes of paragraph (1), the terms “health insurance coverage” and “health insurance issuer” have the respective meanings given such terms by section
9832.
(e)
Liability for tax
The following shall be liable for the tax imposed by subsection (a) on a failure:
(3)
In the case of a failure under section
9803 (relating to guaranteed renewability) with respect to a plan described in subsection (f)(2)(B), the plan.
(f)
Definitions
For purposes of this section—
(2)
Specified multiple employer health plan
The term “specified multiple employer health plan” means a group health plan which is—