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07-12-2013 IRS Releases Additional Guidance on Delay of Reporting Requirements and Employer Shared Responsibility Payments

On July 9, 2013, the Internal Revenue Service ("IRS") issued Notice 2013-45 to provide additional guidance on the delay of certain mandatory reporting obligations under the Patient Protection and Affordable Care Act, as amended ("PPACA"), which is the federal health care reform law, until January 1, 2015. Because the IRS believes the delay in the application of these reporting requirements makes it impractical to determine which employers owe shared responsibility payments for 2014, the Notice also provides that no employer shared responsibility payments will be assessed for 2014. However, the transitional relief does not impact other PPACA provisions, such as the premium tax credit and the individual shared responsibility payment.

Accordingly, employers and individuals must comply with other PPACA provisions. The Notice supplements the Obama Administration's announcement on July 2, 2013, that delayed certain reporting obligations and the employer shared responsibility payment for 2014.

The Notice affects compliance with three sections of the Internal Revenue Code of 1986, as amended (the "Code") created by the PPACA. First, Section 6055 of the Code requires annual information reporting by health insurance carriers, self-insured employers, government agencies, and certain other providers of health care coverage. Section 6056 also requires annual information reporting by applicable large employers with respect to the health coverage offered to their full-time employees. In general, an applicable large employer is an employer with at least 50 full-time employees, calculated by adding the number of full-time employees (employees who work at least 30 hours per week) and full-time equivalent employees. While the Obama Administration has delayed the reporting obligations under Sections 6055 and 6056 until 2015, the IRS encourages employers to voluntarily comply with the provisions in 2014 using proposed rules expected to be released later this summer. The Notice emphasizes that information reporting under Sections 6055 and 6056 is optional in 2014, no penalties will be applied for failure to comply with these provisions for 2014, but the reporting obligations (and related penalties for noncompliance) will apply in 2015.

Next, the Notice addresses Section 4980H, which establishes the employer shared responsibility provisions (sometimes referred to as the "employer mandate" or the "play or pay" provisions). Generally, Section 4980H requires large employers to offer affordable, minimum value health coverage to its full-time employees or pay a shared responsibility payment if one or more of its full-time employees receive a premium tax credit. In the Notice, the IRS explained that because the Section 6056 information reporting is necessary to determine whether employers owe a shared responsibility payment, no employer shared responsibility payments will be assessed in 2014. However, employers are encouraged to maintain or expand their health coverage in 2014. The obligations under Section 4980H will be enforced beginning in 2015.

Despite the delay of these provisions of the PPACA, employers should continue to review and make necessary changes to their health plans in order to comply with all provisions of the PPACA. Doing so gives employers the necessary time to address various compliance issues that may arise and correct any problems.

Fraser Stryker is a leader in employee benefits and tax law. Attorneys in the Firm's Employee Benefits & ERISA Practice Group advise businesses, governments, and nonprofit/tax-exempt organizations on a wide variety of tax and employee benefits matters, transactions, and litigation. Fraser Stryker helps employers implement and maintain innovative and cost-effective employee benefit plans that attract and retain top talent. Attorneys on the Firm's Patient Protection and Affordable Care Act & Health Care Reform Response Team advise businesses, political subdivisions and other governmental entities, health care organizations, and tax-exempt entities on all aspects of health care reform implementation and compliance. For more information, or if you would like to discuss the PPACA, its reporting requirements, or the employer shared responsibility provisions, please contact Nicole R. Konen, or Emily Wischnowski.

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This article is provided by Fraser Stryker for general informational purposes and is not intended to be and should not be construed as legal advice on any specific facts or circumstances.

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