Delay in Employer Mandate and Reporting
ONE-YEAR IMPLEMENTATION DELAY The large employer pay or play rules and related reporting requirements were set to take effect in 2014. However, on July 2, 2013, the Treasury announced that these will be delayed for one year, until 2015. This means that:
Information reporting under §§ 6055 and 6056 will be optional for 2014 and no penalties will be applied for failure to comply with these requirements for 2014; and No employer shared responsibility payments will be assessed for 2014. However, both the information reporting and the employer pay or play requirements will be fully effective for 2015.
The IRS issued Notice 2013-45 to provide more information on the delay.
According to the IRS, the delay of the reporting requirements provides additional time for input from employers and other reporting entities in an effort to simplify these requirements, consistent with effective implementation of the ACA. This delay is also intended to provide employers, insurers and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.
The delay of the employer mandate penalties was required because of issues related to the reporting requirements. Because the reporting rules were delayed, the Treasury believed it would be nearly impossible to determine which employers owed penalties under the shared responsibility provisions.
The pay or play regulations issued earlier this year left many unanswered questions for employers. The IRS highlighted several areas where it would be issuing more guidance. Presumably, the additional time will give the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing these requirements.
Effect on Other ACA Provisions
The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through an Exchange and the individual mandate.
Individuals will continue to be eligible for the premium tax credit to purchase coverage through an Exchange as long as they meet the eligibility requirements (for example, their household income is within a specified range and they are not eligible for other minimum essential coverage).
Future Guidance
Proposed rules for the information reporting provisions are expected to be published this summer. The proposed rules will reflect the fact that transition relief will be provided for the information reporting requirements.
It is still unclear how the new deadline will impact guidance that has already been issued, such as the transition relief for non-calendar year plans and the optional safe harbor for determining full-time status. Future guidance may affect these and other rules under the ACA.
WHAT THIS MEANS FOR EMPLOYER The Obama Administration’s decision to delay the employer mandate penalties and related reporting requirements will have a significant effect on many employers. See below for an overview of the ACA provisions that are affected by the delay, the provisions that are not affected by the delay and steps that employers are encouraged to take in 2014.
