On July 2, 2013, the Obama Administration announced it would delay enforcement of the employer shared responsibility provision (sometimes referred to as the “employer mandate”) and certain reporting requirements that were enacted as part of the Patient Protection and Affordable Care Act, as amended (the “Act”), until 2015 in order to provide employers more time to comply with the health care reform law.
In general, the employer shared responsibility provision requires employers with 50 or more full-time employees (or the equivalent thereof) to provide their employees with the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan. Under certain circumstances, if the employer fails to offer the opportunity to enroll in such coverage, the employer may be assessed an “assessable payment.” Employers with fewer than 50 full-time employees (or the equivalent thereof) are not affected by the employer shared responsibility provision or its delayed enforcement. The employer shared responsibility provision was set to become effective January 1, 2014. The Obama Administration has stated that “assessable payments” will not apply for 2014. Instead, “assessable payments” will apply in 2015.
The rationale for the delay is to provide the Obama Administration and business community more time to work together to implement the Act. The Act includes new reporting requirements for insurers (section 6055) and for certain employers (section 6056) with respect to the health insurance coverage offered to full-time employees. The effective date of these reporting requirements is being delayed until 2015. Over the next year, the Obama Administration intends to develop ways to simplify the new reporting requirements for businesses and expects the business community to develop ways to expand their health insurance coverage options and conform with the new reporting requirements.
The Department of the Treasury expects to publish proposed rules later this summer implementing the reporting requirements for insurers (section 6055) and for certain employers (section 6056). After the publication of the proposed rules, the Obama Administration will strongly encourage employers to improve their health insurance coverage during the transition period in order to make implementation of the new rules less onerous.
Generally, the delay in enforcement will not affect individuals who seek to purchase health insurance. Employees will still have access to the premium tax credits available under the Act. The Obama Administration still plans to open health insurance exchanges on October 1 of this year for individuals seeking health care coverage. Accordingly, the individual responsibility provisions (sometimes referred to as the “individual mandate”) will still become effective January 1, 2014.
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 Act or the employer shared responsibility requirements, please contact Nicole R. Konen, or Emily Wischnowski.
Formed in 1898, Fraser Stryker has grown to become a nationally recognized law firm that represents local, national, and multinational clients in complex business transactions and litigation matters. Fraser Stryker attorneys participate actively in a wide array of community organizations. Visit our home page for more information about us.
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.
Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein.