IRS Guidance Released on the Delayed Implementation of the Affordable Care Act's Play or Pay Rules - Penalties Will Not Apply to Large Employers That Do Not Offer Health Coverage in 2014


On the heels of last week’s announcement that the Affordable Care Act’s (ACA) reporting requirements and Play or Pay penalties will not go into effect until 2015, the IRS has released transition relief clarifying that the delayed implementation is restricted solely to these provisions. The individual mandate, eligible individuals’ access to premium tax credits, the PCORI and transitional reinsurance fees, and all other ACA provisions will take effect as originally scheduled.

Providers of minimum essential coverage, such as insurance companies and self-insuring employers, are required to report certain information to the IRS each year. In addition, all large employers subject to the Play or Pay rules must provide certain information to the IRS on an annual basis. These requirements were originally scheduled to go into effect in 2014, but have been delayed one year to allow additional time for simplification of the reporting requirements and to give those required to report information additional time to prepare. Proposed rules are expected to be released this summer, and the transitional relief encourages voluntary compliance with those rules in 2014.

The information large employers must report each year makes it possible for the IRS to determine if the employer is subject to the Play or Pay penalties. Due to the delayed implementation of this requirement, the Play or Pay penalties also had to be delayed until 2015. Though the transition relief encourages employers to maintain or expand health coverage in 2014, no Play or Pay penalties will be assessed for 2014. As such, all large public and private employers that do not offer affordable coverage providing minimum value to full-time employees in 2014 will not be subject to the Play or Pay penalties if one or more full-time employees enroll in a health plan through the Exchange and receive a premium tax credit or cost-sharing reduction.

Topics:  Affordable Care Act, Compliance, Deadlines, Delays, Employer Mandates, Fees, Form 720, Healthcare, IRS, Pay or Play, PCORI, Penalties, U.S. Treasury

Published In: Health Updates, Insurance Updates, Labor & Employment Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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