It’s Official: IRS Issues Guidance Affirming One-Year Delay in the Affordable Care Act Employer Mandate and Related Reporting Rules

by Mintz Levin - Employment Matters
Contact

On July 9, less than a week after the Obama administration announced a one-year delay in the enforcement of the employer shared responsibility (aka “pay-or-play”) rules,1 the IRS has issued guidance making the move official. The guidance — Notice 2013-45 — refers to the delay as “transition relief for 2014” from the Act’s employer shared responsibility provisions and related reporting requirements.

  • Regards employer shared responsibility, the Notice asserts that the relief is intended to “to provide employers, insurers, and other[s] … time to adapt their health coverage and reporting systems”; and
  • Regards the reporting requirements, the Notice says that the relief is intended to “provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law.” (The information reporting rules have not yet been issued.)

Notice 2013-45 Q&As

The Notice, which is presented in question and answer format, answers the following questions:

(1) When will the rules be published regarding the Act’s information reporting requirements?

This question addresses particular reporting rules that are found in Internal Revenue Code sections 6055 (relating to insurers, self-insuring employers, government agencies, and other parties that provide health coverage) and 6056 (imposing a separate reporting requirement on applicable large employers with respect to the health coverage offered to their full-time employees). The Notice clarifies that “no penalties will be applied for failure to comply with these information reporting provisions for 2014.” Interpretive guidance under the reporting rules will be issued this summer.

(2) What does the transition relief mean for application of the Employer Shared Responsibility Provisions in 2014?

The response makes clear that the employers that are subject to the Act’s employer shared responsibility provisions — “applicable large employers (i.e., those with 50 or more full-time and full-time equivalent employees on business days during the preceding calendar year) — will not be required to determine or remit payments irrespective of whether they offer “minimum essential coverage” under an “eligible employer sponsored plan.” (The terms “minimum essential coverage” and “eligible employer sponsored plan” are explained in our previous client advisory of January 16, 2013.)

(3) What is the impact of the delay on access by low- and moderate-income employees to the premium tax credits provided by state-based, partnership or Federally-facilitated insurance marketplaces?

The Notice emphasizes that individuals will continue to be eligible for the premium tax credits if their income is within the range specified by law and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value. (The particulars of the premium tax credits rules are explained in our previous client advisory of May 16, 2013.) As a result, if an employer does offer minimum essential coverage under an eligible employer sponsored plan, and if that coverage is both affordable and provides minimum value, then the employee will not qualify for a premium tax credit irrespective of his or her household income.

(4) Does the delay affect any other provision of the Act?

No. The transition relief through 2014 for purposes of the Act’s employer shared responsibility rules and the reporting provisions described above do not modify or change any other provision of the Act, including the penalties imposed on individuals for failing to maintain minimum essential coverage.

Implications

Business groups were generally elated with the original announcement, and their advisors will similarly welcome the Notice. Compliance with employer shared responsibility rules is costly, and it has proved to be more complicated than many expected. Proposed regulations issued at the end of 2012 included a good deal of flexibility, but that flexibility comes at the cost of added complexity. The delay gives employers more time to understand and navigate these rules. But it also renders moot certain transition rules that require employers to take hours of service into account before January 1, 2014. Thus, data collection for compliance in 2015 will likely commence on and in some cases even before January 1, 2014.

The Act’s reporting rules are expansive. The delay takes the pressure off the regulators to issue rules prematurely. They now have time to carefully consider and integrate public comments, and provide rules that are at the same time workable and faithful to the statute.

The delay will also likely be welcome by insurance carriers who have been slow to develop products for the large group market. While the standards for plan actuarial value (or plan generosity) in the individual and small group as contrasted with the large group market and self-funded plans both refer to a 60% threshold for covering plan costs, the standards are different. The delay should give carriers the time to make plans available for large groups that are tailored to the specific requirements of the law. The Treasury Department and IRS will also need to modify existing guidance to take account of the delay.

While the delay in the implementation of the employer shared responsibility rules and the reporting rules is certainly welcome, employers would be wise to use this opportunity to focus on, rather than simply not think about, these rules. These rules have been delayed, not repealed, and they continue to represent a formidable compliance challenge.

Endnotes

1 The delay was announced in postings to the websites of both the White House (http://www.whitehouse.gov/blog/2013/07/02/we-re-listening-businesses-about-health-care-law)
and the Treasury Department (http://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx).

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.

© Mintz Levin - Employment Matters | Attorney Advertising

Written by:

Mintz Levin - Employment Matters
Contact
more
less

Mintz Levin - Employment Matters on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.