contribution because it may be used for non-health benefits (including non-taxable
benefits and/or cash or another taxable benefit), but that may be used by the employee
towards the amount the employee is otherwise required to pay for the health coverage,
will be treated as reducing the amount of an employee’s required contribution. This
relief is not available with respect to a flex contribution arrangement offering non-health
benefits that is adopted after December 16, 2015 or that substantially increases the
amount of the flex contribution after December 16, 2015 (a “non-relief-eligible flex
contribution arrangement”). For this purpose, a flex contribution arrangement will be
treated as adopted after December 16, 2015 unless (1) the employer offered the flex
contribution arrangement (or a substantially similar flex contribution arrangement) for a
plan year including December 16, 2015; (2) a board, committee, or similar body or an
authorized officer of the employer specifically adopted the flex contribution arrangement
before December 16, 2015; or (3) the employer had provided written communications to
employees on or before December 16, 2015 indicating that the flex contribution
arrangement would be offered to employees at some time in the future.
In addition, solely for coverage for plan years beginning before January 1, 2017, an
employer may reduce the amount of the employee’s required contribution by the
amount of a non-health flex contribution (other than a flex contribution made under a
non-relief-eligible flex contribution arrangement) for purposes of information reporting
under § 6056 (line 15 of Form 1095-C). Because treating a non-health flex contribution
as reducing an employee’s required contribution may affect the employee’s eligibility for
the premium tax credit under § 36B, employers are encouraged not to reduce the
amount of the employee’s required contribution by the amount of a non-health flex
contribution for purposes of information reporting under § 6056. If an employee’s
required contribution is reported in this manner (that is, without reduction for the amount
of a non-health flex contribution) and the employer is contacted by the IRS concerning a
potential assessable payment under § 4980H(b) relating to the employee’s receipt of a
premium tax credit, the employer will have an opportunity to respond and show that it is
entitled to the relief described in this Q&A-8 to the extent that the employee would not
have been eligible for the premium tax credit if the required employee contribution had
been reduced by the amount of the non-health flex contribution or to the extent that the
employer would have qualified for an affordability safe harbor under § 54.4980H-
(4)(e)(2) if the required employee contribution had been reduced by the amount of the
non-health flex contribution. See also Q&A-26 for certain relief with respect to employer
information reporting under § 6056.
For individual taxpayers, the rules in §§ 1.5000A-3(e)(3)(ii)(E) and 1.36B-
2(c)(3)(v)(A)(6) apply for months beginning after December 31, 2013, as provided in
those regulations. Accordingly, an employer non-health flex contribution, as illustrated
in Example 2 and Example 3 of this Q&A-8, does not reduce the amount of an
employee’s required contribution for purposes of § 5000A and for determining eligibility
for the premium tax credit under § 36B.
Nothing in this notice, including this Q&A-8, modifies the guidance in Notice 2012-40
treating flex contributions under a health flexible spending account (health FSA) that an