124 STAT. 851 PUBLIC LAW 111–148—MAR. 23, 2010 the United States, by the government of any State or political subdivision thereof, or by any agency or instrumen- tality of any such government. ‘‘(2) DETERMINATION OF COST.— ‘‘(A) IN GENERAL.—The cost of applicable employer- sponsored coverage shall be determined under rules similar to the rules of section 4980B(f)(4), except that in deter- mining such cost, any portion of the cost of such coverage which is attributable to the tax imposed under this section shall not be taken into account and the amount of such cost shall be calculated separately for self-only coverage and other coverage. In the case of applicable employer- sponsored coverage which provides coverage to retired employees, the plan may elect to treat a retired employee who has not attained the age of 65 and a retired employee who has attained the age of 65 as similarly situated bene- ficiaries. ‘‘(B) HEALTH FSAS.—In the case of applicable employer- sponsored coverage consisting of coverage under a flexible spending arrangement (as defined in section 106(c)(2)), the cost of the coverage shall be equal to the sum of— ‘‘(i) the amount of employer contributions under any salary reduction election under the arrangement, plus ‘‘(ii) the amount determined under subparagraph (A) with respect to any reimbursement under the arrangement in excess of the contributions described in clause (i). ‘‘(C) ARCHER MSAS AND HSAS.—In the case of applicable employer-sponsored coverage consisting of coverage under an arrangement under which the employer makes contribu- tions described in subsection (b) or (d) of section 106, the cost of the coverage shall be equal to the amount of employer contributions under the arrangement. ‘‘(D) ALLOCATION ON A MONTHLY BASIS.—If cost is deter- mined on other than a monthly basis, the cost shall be allocated to months in a taxable period on such basis as the Secretary may prescribe. ‘‘(e) PENALTY FOR FAILURE TO PROPERLY CALCULATE EXCESS BENEFIT.— ‘‘(1) IN GENERAL.—If, for any taxable period, the tax imposed by subsection (a) exceeds the tax determined under such subsection with respect to the total excess benefit cal- culated by the employer or plan sponsor under subsection (c)(4)— ‘‘(A) each coverage provider shall pay the tax on its applicable share (determined in the same manner as under subsection (c)(4)) of the excess, but no penalty shall be imposed on the provider with respect to such amount, and ‘‘(B) the employer or plan sponsor shall, in addition to any tax imposed by subsection (a), pay a penalty in an amount equal to such excess, plus interest at the under- payment rate determined under section 6621 for the period beginning on the due date for the payment of tax imposed by subsection (a) to which the excess relates and ending on the date of payment of the penalty.
