Obama Administration Postpones Implementation Of Employer Mandate To 2015

According to an announcement on July 2 from the White House that probably surprised plan practitioners and employers alike, employer shared responsibility payments will not apply until 2015, instead of in 2014, as was originally anticipated. Very generally, Code Sec. 4980H, as added by the Patient Protection and Affordable Care Act (ACA), provides that any applicable large employers that fail to offer to at least 95 percent of full-time employees and their dependents minimum essential coverage will be assessed a $166.67 per month ($2,000 per year) penalty per full-time employee, assuming that at least one employee obtains premium assistance via a health care exchange. It also provides that applicable large employers that offer minimum essential health coverage that is either unaffordable or does not provide minimum value will be assessed a $250 per month ($3,000 per year) penalty for each employee that receives subsidized coverage.

The Internal Revenue Service and the White House have stated that the relief for employers is being provided based on a decision to also provide an additional year before the ACA mandatory employer and insurer reporting requirements begin, in order to come up with a re-vamped and simplified reporting process and “to propose a smarter system.” The IRS has stated that it plans to issue proposed regulations on the extension of the ACA mandatory employer and insurer reporting requirements, which it says will describe the transition toward simplifying the reporting requirements and toward providing additional time for employers to test and then, if necessary, adapt their health coverage and reporting systems. Later this summer, after dialoguing with stakeholders, it expects to issue proposed regulations on the implementation of Code Sec. 6055 requirements for information reporting by insurers, self-insuring employers, and other parties that provide health coverage and on the implementation of Code Sec. 6056 information reporting requirements by employers regarding health coverage offered to their full-time employees.

Both the IRS and the Obama Administration have stated that the extensions are in response to concerns they have received from employers about the ACA’s complex reporting requirements, and the Administration also has stated that some of the more detailed reporting requirements may be unnecessary for businesses that exceed the ACA’s minimum standards. Therefore, because any assessed employer responsibility payments would be based on reporting consistent with the ACA’s original requirements, the payments will not be collected for 2014.

The IRS has added that it is still strongly encouraging employers to maintain or expand health coverage, regardless of this new transition relief. Also, this latest decision does not in any way affect employees’ access to premium tax credits via the health care exchanges.

For more information, visit http://www.treasury.gov; or http://www.whitehouse.gov.

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